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Economy

UPDATED: Investors Deposit 162.6 million Shares of Zenith Bank, Three Others for Securities Lending

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securities lending

By Dipo Olowookere

A total of 162.6 million shares of four companies listed on the Nigerian Exchange (NGX) Limited have been offered by investors for securities lending.

The stocks of these publicly quoted organisations are Zenith Bank, GTBank, MTN Nigeria and Dangote Sugar, according to a notice from the exchange.

In the disclosure sighted by Business Post on Tuesday, it was disclosed that investors have volunteered to offer for lending their idle 77,333,000 units of Zenith Bank equities.

In the notice, which said the figures were as of Monday, April 12, 2021, Dangote Sugar had 43,000,000 units to be borrowed by interested traders, while GTBank has 31,095,000 units, with MTN Nigeria having 11,196,000 million units.

Meaning of securities lending

According to the NGX Group, securities lending involves the practice of loaning or transferring financial assets like stocks, bonds and others to another party from the holder for a fee.

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For study.com, securities lending allows investors to borrow shares, sell them and buy them back at a lower price in the future. If all goes as planned, the short seller is able to return the borrowed shares and keep any profits. Without the ability to borrow securities, investors would have to buy a stock before they sold it.

This market practice, according to the former acting Director-General of the Securities and Exchange Commission (SEC), Ms Mary Uduk, is good for the Nigerian capital market because it would deepen liquidity, as well as offer more returns to investors and all parties involved, adding that the commission has rules in place to encourage market confidence.

She had pointed out that securities lending is a useful trading tool for short selling, hedging, and arbitrage. Explaining that hedge funds can also partake more in the Nigerian capital market as the SEC develops securities lending activities.

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“We have a framework which has been approved. However, we noticed that it is not being fully explored. What we want to do now is to see what restrictions we can remove and what enlightenment we can do to ensure that other necessary parties key into the rules.

“We are encouraging them to go into securities lending. They are being encouraged to lend out these securities, they make money out of it,” Ms Uduk had said at an event held in Abuja in December 2019.

How securities lending works

According to an expert in the capital market, investors with idle equities deposit their shares to a securities lending agent (SLA) and interested trader approach the SLA to borrow them with collateral and then pay a fee with a promise to return the stocks at an agreed period.

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“The SLA is usually a big bank with significant capitalisation and they collect collateral from borrowers. So, even if the borrower defaults, the collateral will cover the securities.

“In the unlikely event that the collateral doesn’t cover, the SLA is mandated by regulation to make the lender whole by guaranteeing the safety of their securities,” the investor, who asked to remain anonymous, explained.

Editor’s Note:

This article has been updated with the correct message it was intended to convey. We sincerely apologise for the initial error.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng

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Economy

NGX Lists 29.4 billion GT HoldCo Shares at N28.55 Each

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GT HoldCo Shares

By Dipo Olowookere

The Nigerian Exchange (NGX) Limited has finally listed 29,431,179,224 ordinary shares of Guaranty Trust Holding Company (GT HoldCo) Plc on its trading platform.

The stocks were admitted on the exchange on Thursday, June 24, 2021, after the delisting of the entire GTBank equities on the same platform.

Business Post reports that the shares were listed today at a unit price of N28.55.

Last Friday, the stock exchange placed trading in the equities of GTBank on full suspension ahead of their delisting to allow the introduction of GT HoldCo shares.

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Today, the GTBank shares were removed from the exchange, a total of 29,431,179,224 and were replaced with 29,431,179,224 units of GT HoldCo.

Confirming this development, the NGX in a circular said, “We refer to our market bulletin with reference number NGX REG/LRD/MB16/21/06/18 dated June 18, 2021, wherein the market was notified that trading in the shares of Guaranty Trust Bank Plc (GTB) was placed on full suspension effective Friday, June 18, 2021, in preparation for the delisting of GTB and listing of the Holding Company, Guaranty Trust Holding Company Plc (GT HoldCo).

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“The market is hereby notified that the entire 29,431,179,224 issued shares of GTB were delisted from the daily official list of the NGX today, June 24, 2021, while GT Holdco’s entire issued share capital of 29,431,179,224 ordinary shares of 50 kobo each were also today, June 24, 2021, listed on the daily official list of NGX at N28.55 per share.

“The delisting of GTB and listing of GT HoldCo on NGX is pursuant to the Scheme of Arrangement between Guaranty Trust Bank Plc and the holders of its fully paid ordinary shares of 50 kobo each as approved by the Securities and Exchange Commission (SEC) and sanctioned by the court.”

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GTBank restructured its business to allow it to offer more services and improve the earnings and value of the company. This led to the change to a financial HoldCo, with GTBank becoming a private company and will operate as a banking institution.

Other subsidiaries were created to offer services in financial technology (fintech), insurance, asset management and other sectors.

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Economy

June 2021 Allocation to FG, States, LGs Drops to N605.96bn

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June 2021 allocation

By Adedapo Adesanya

The federal government, the 36 states of the federation and the 774 local government areas shared the sum of N605.96 billion from the revenue generated in May 2021.

This was disclosed by the Federation Accounts Allocation Committee (FAAC) in a communique released on Thursday after its meeting held via virtual conferencing.

Business Post reports that the amount shared by the three tiers of government for the June 2021 allocation was lower than the N616.9 billion disbursed last month.

Giving a breakdown of the disbursement, the committee explained that from the inclusive cost of collection to Nigeria Customs Service (NCS), Department of Petroleum Resources (DPR) and Federal Inland Revenue Service (FIRS), the federal government received N242.1 billion, the states received N194.2 billion, while the local government councils got N143.7 billion.

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The nine oil-producing states of Delta, Akwa-Ibom, Bayelsa, Rivers, Edo, Ondo, Imo, Abia and Lagos all received N26.9 billion as a 13 per cent derivation of mineral revenue.

The communique issued by the FAAC at the end of the meeting indicated that the gross revenue available from the Value Added Tax (VAT) for May 2021 was N181.1 billion as against N176.7 billion achieved in the preceding month of April 2021. This resulted in an increase of N4.368 billion.

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The distribution is as follows; federal government got N25.3 billion, the states received N84.2 billion and local government councils received N58.9 billion.

The distributed statutory revenue of N428.198 billion received for the month was lower than the N497.385 billion received for the previous month by N69.197 billion, from which the federal government received N175.5 billion, states got N89.0 billion, while the LGs got N69.6 billion, and the 13 per cent mineral derivation handed to the nine oil states amounted to N24.666 billion.

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The communique also revealed that Companies Income Tax (CIT), and Oil and Gas Royalties, Import and Excise Duty decreased in the month, meaning only VAT increased in the month under review, although marginally.

The communique, however, disclosed that total revenue distributable for the current month inclusive of gross statutory revenue of N357.9 billion, VAT of N168.4 billion, solid mineral revenue of N7.9 billion, exchange gain of N1.7 billion and augmentation from oil and non-oil revenue of N50 billion and N20 billion respectively brought the total distributable revenue to N605.958 billion.

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Economy

National LPG Takes Sensitization to 12 States

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Domestic LPG

By Adedapo Adesanya

The National Liquefied Gas Petroleum (LGP) sensitization and awareness campaign to reduce gas flare has kickstarted in 12 states across the country.

Speaking at a two-day sensitization and awareness campaign held in Abuja, Mr Dayo Adeshina, the programme manager National LPG expansion implementation plan (NLEIP), said the exercise was the commitment of the climate change initiative to reduce emission by 20 per cent.

He said the National LPG pilot programme, which will start after the sensitization, is to begin in Enugu and Ebonyi States for South-East then to the South-South States of Delta and Bayelsa and in the South West – Lagos and Ogun.

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In the North West are Sokoto and Katsina States; the North East batch will be done in Bauchi and Gombe States while in the North Central, it will kick off in Niger and the Federal Capital Territory (FCT).

He said, “The sensitization awareness campaign is targeted at 12 pilot states, two in each geo-political zone. During the campaign, we will highlight the importance of the LGP to the government and the people.

“Every year almost nine hundred thousand people are affected by the effects of kerosine and charcoal which leads to malaria, the government plan is to display the energy mixture which currently stands at 65 per cent, kerosine 30 per cent, LPG 5 per cent.

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“LPG would ensure accessibility, acceptability and affordability.”

Mr Adeshina said to drive the exercise well, an inter-ministerial committee on LPG was constituted and is being headed by the Vice President, Mr Yemi Osinbajo, adding that the composition of the committee shows the commitment of the federal government to the expansion and implementation of LPG in Nigeria.

“So, to make it available, some of the policy directives were worked on and past in 2017, the government will remove necessary bottlenecks,” he said.

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LPG is a fossil fuel closely linked to oil. As a fuel, it is used for cooking, lighting, and central heating. It is a clean-burning, non-poisonous, dependable and high-performance fuel stored and transported in containers as a liquid, but is generally drawn out and used as gas.

LPG has a very wide variety of uses, mainly used across many different markets – agricultural, recreation, hospitality, calefaction, construction, sailing and fishing sectors – as an efficient fuel.

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