By CHIMA TITUS NWOKOJI
Expectations are rife for shareholders of Stanbic IBTC Bank, First Bank Nigeria Plc., as well as other banks scrambling to get their Holding Companies (HoldCo) listed in the Nigerian Stock Exchange (NSE) to reap another reform windfall tagged ‘special dividend’. The special dividend comes as part of the fall-out of the 2010 Central Bank of Nigeria (CBN) reform policy that seeks to have banks divest from non-core banking activities. Despite agitations trailing the policy, those who are convinced it was in their best interest to adopt the Holding Company structure have started listing on the Stock Exchange, thus raising shareholders’ hope of special dividend.
However, what is not certain is whether the new HoldCos would live up to popular expectations, or have shareholders’ hopes dashed at the end of the day. A corporate finance expert at Afrinvest (West) Africa Limited, Mr. Victor Ndukuba, raised expectations of shareholders of banks, which capital is in excess of what is needed to operate the business, stating that they stand to reap special dividends. He recalled that the banks’ action was in compliance with the revised regulatory framework by the Central Bank, which requires banks to divest from non-core banking businesses, or adopt a HoldCo structure. According to him, most shareholders stand to gain special dividend while others will get the same value of shares they held before restructuring.
The Stock Exchange, penultimate Friday and Monday, admitted the shares of Stanbic IBTC Holding Plc. and First Bank of Nigeria Plc. into the Daily Official List. This is even as industry sources point to First City Monument Bank (FCMB) and United Bank for Africa (UBA) as gearing up to get listed is this week. A stockbroker and the Managing Director of Enterprise Capital, Mr Rotimi Fakayejo, stated that now that First Bank has adopted a HoldCo structure and yet the shareholders still have the same stake they have before, it definitely means there is bumper harvest for them as the effect on the banks’ ability to make more returns to shareholders will be enhanced. “I think it’s a good thing for the bank, compared to other banks that divested from their various subsidiaries.”
In a Channels TV programme monitored by Daily Sun, Rotimi said: “We are still expecting UBA to come and do the same. But very soon I think, they will tell us when they will actually come around to do the listing of the new Holding Company.” According to Ndukuba, because Stanbic reduced the number of shares each shareholder held owing to the fact that the new company does not need all that capitalization, it had to increase the price of the shares to keep it at par with the value of portfolio held by each shareholder. “This keeps the value of the shares the same.
“So, shareholders of Stanbic IBTC receiving cash as well as same value of shares, is a bonus. It is equivalent to a special dividend,” the corporate finance expert said. The N18.75 billion shares of Stanbic IBTC Bank have been delisted from the official list. Instead, a total of N10 billion issued and fully paid up shares of N50kobo each were listed at a price of N13.03 per share for Stanbic Holding Company. The excess capital from the bank’s share cancellation would be returned to shareholders in cash form. Commenting on the excess share capital that will be returned to shareholders in cash, Ndukuba said it is a welcome development.
The capitalization of N10 billion he added is what the company that will own the bank and other subsidiaries needs to operate. A special dividend is a payment made by a company to its shareholders that the company declares to be separate from the typical recurring dividend cycle, if any, for the company. Special dividends according to experts, give firms the opportunity to pay out what is not needed to operate the business. Daily Sun checks revealed that before the listing, Stanbic IBTC Bank’s share price as at November 20 and 21 was N7.35. Its Price Earnings ratio stood at N36.31 while dividend yield was 1.36 per cent.
This is compared to the market price of N13.03 on the 26th and 27th November after listing the Holding Company.