Daily Market Summary: Is the dollar reversal in sight?

Fundamentals still remain the key drivers of activities on monday as equities in the US and America saw a surge on monday. European stocks surged on the German Chancellor's victory in the weekend elections in Germany. The DAX had edged up 2.78% by the end of trading while the CAC and the FTSE100 edged up 2.3% and 1.7% respectively. In the US, news of Xerox acquiring ACS buoyed risk sentiments as the DOW, Nasdaq and S&P 500 finished up by 1.28%, 1.9%, and 1.78% respectively. As traders look to market moving fundamentals coming later in the week, technical analysis point to a possible dollar reversal. The euro failed to break through resistance at 1.4675. The graph below shows some form of head and shoulder pattern formed with the bearish trend emerging on the eur/usd 1 hour chart.


Short term resistance might be at 1.4675 while the second short-term resistance is at 1.4725.

Another sign of a possible change in risk sentiments is the fact that the volatility index (VIX) is at a multi-period low and when compared against the S&P 500, there are clear market correction signals on the S&P 500 index.



Traders are keeping their eyes on the volatility index which is at a multi-year low which signifies a possible correction in equities and a collapse of risk appetite which is good news for the dollar.

Traders expect further decline in the sterling as they look to GDP figures due in hours which is expected to show a year-on-year drop of 5.8% in the size of the british economy. For most of the day the sterling traded sideways.

As the dollar comes under more pressure as a global reserve currency, long-term US treasury bonds increased (yield dropped) as investors appear to be moving into US safe haven assets. Eyes are also on commodities especially on oil following geographical tensions that stirred between the US and its allies on one hand and Iran on the other over Iran's suspected secret nuclear bunker in Tehran.

So far, its still very much about the green-back. Happy trading!!!

Daily Market Summary: Its all about the green back

As the G20 meeting gets underway in the Pittsburgh, currency traders are looking out for more tips to signal a dollar pullback. Global equities are said to be overvalued and over the last 24 hours, we have seen the DJIA, FTSE 100, S&P 500 as well as the Nasdaq index pare some of the gains they've mounted over the weeks. As issues of financial regulation and bankers' compensation top the agenda at the G20 meeting, analysts are looking out for any sign of a probable exit strategy from the various stimulus programmes despite regulators in US and UK warning of a slow and uncertain recovery. Contrary to major USD, the sterling got pounded to a multi month low following dovish comments from the Governor of the Bank of England. Here is an
hourly chart of the GBP/USD pair:



The sterling is eyeing the 1.6 support mark as RSI on a 4 hour chart shows the pair in oversold zone. Further downside is expected as recovery in the UK is expected to be slow but a near-term slide will ride on dollar strength. Mid-week reports from the BoE warns of a slow recovery but analysts see an open window for the BoE to expand its asset repurchase programme to further support the recovery process.

In the near-term, the Euro appears to have lost its upside steam. Breaking through the bullish trend line on a thirty minutes chart during New York trading hours point to a possible reversal. The dollar gained against the loonie as investors dumped equities in apparent loss of risk appetite ahead of G20 summit.

Friday the 14th: While bankers slept....(Part 1)

This is my first public reaction to the recent high profile dismissal of 5 Nigerian bank chiefs together with their entire cabinet. My first reaction will not be too analytical as I basically want to lean towards fundamentals this time because that is exactly what matters now. With respect to how the decision will affect investment in banking stocks, that is a bit complex as I will wait for investors and analysts react to what is happening before taking a position for the medium to long term. The decision and action of the CBN under the 'fearful' leadership of Sanusi Lamido Sanusi is a very sensitive one. Very sensitive that it is going to be unfair to refer to his actions as being politically motivated. The sensitivity of this issue emanates from two things: Its timing, and secondly, the persons invloved.

First is the timing. Critics say that 8 weeks is too short a time to take such a very major decision to wipe out the board of directors of 5 banks out of which 4 are mega-banks (in my own view) but let me remind them that Sanusi was a previous colleague to these guys even while he was with UBA and later when he headed First Bank. He has been in the system so he knows where and what are the problems. Dont forget also that we are only 5 months to the deadline for the common year-end policy which I think is probably another nightmare for bankers. But for bankers who had hopes pinned on the fact that the common year-end thing was going to be dumped or postponed, they can begin to have rethink now.

Next key issue for me is the persons involved. Question: If your colleague at work suddenly gets promoted to become your boss and the next day after becoming your boss he sacks you for mishandling the job. Could he have sacked you for mishandling the job while he was your boss or for mishandling the job during the tenure of his predecessor who did nothing to check your excesses? I guess the CBN decision speaks less of the man at the center of it all (Sanusi Lamido) but rather, speaks more of the man who had occupied that office of CBN governor for the past 5 years- Prof Charles Soludo. I remember vividly well Soludo's public defense of Intercontinental bank months ago when news was going around the blogosphere about the bank's illiquidity. Today, Intercontinental is among the banks 'skating on thin ice'. Probably the most high profile sack is that of Erastus Akingbola of Intercontinental bank. This is Nigeria's no1 professional banker in his position as the president of the Chartered Institute of Bankers of Nigeria (CIBN). His dismissal does not carry consequences only for the bank, it does for the Institute and the banking profession in Nigeria as well. At least the, Institute has its guidelines for the professional conduct of members which members are obliged to observe in their career as professional bankers and as long as they continue to be associated with the Institute.

For someone like me, the CBN decision dis not come as a surprise and if you revert to my earlier post titled 'Of CBN test and Nigerian Banks' on 25th June 2009, you will discover the reason why I said this is not a surprise. Barely 12 hours to when the CBN announced the sack of these CEOs, in a discussion with a friend, I said "...what will make up for the long-term sustainability in the Nigerian banking industry are the drivers of business in that sector. Nigerian banks need to change their business model and stop this CABAL banking...". Someone asked 'When issues get to this point, what exactly is fundamentally wrong?' Here's my answer: What is fundamentally wrong is that the fundamentals are wrong. Banks or should I say bankers have literally gone to bed. Over the years, even during the pre-consolidation days, there has been a constant deviation between banks and their traditional and primary role as money creators.

Profiling Nigeria's new bank chiefs

John Aboh- Oceanic Bank

Mr. John O. Aboh, (Oceanic International Bank Plc), was previously Executive Director (Banking Operations & Services) of First Bank of Nigeria Plc, from where he was appointed Ag. Group Managing Director, Wema Bank Plc. in 2008

Born on July 18, 1956. Mr. Aboh holds a B.Sc. degree in Finance and MBA in Finance & Accounts. He has over the years acquired special skills in Structural International Trade Transactions, Computer Literacy and People Management.

He has also attended several proficiency_enhancing courses within and outside Nigeria. A seasoned Banker, Mr. Aboh began his Banking Career in 1981 in First Bank of Nigeria Plc.

He worked as Credit Analyst, Assistant General Manager and as Deputy General Manager & Chief Inspector in Nigeria Merchant Bank Limited, Nigeria International Bank (Citibank) and UBA Plc respectively.

Notable special projects executed by Mr. Aboh include the reorganisation of International Operations System at Nigeria International Bank (Citibank) and the Implementation of the UBA MoneyGram Money Transfer Service. He is was also Executive Director (Banking Operations & Services) at First Bank. He is married with children.

Mahmud Alabi- Intercontinental Bank
Mr. Mahmud Lai Alabi (Intercontinental Bank) is a graduate of Economics in 1975 with 1st Class Division and the best graduating student of the University in that year having won 5 academic prizes. He has a master degree in economics from Yale University, USA in 1979.

He started his banking career with NAL Merchant Bank Plc as Deputy Manager in 1985 and rose to the position of Senior Manager before he joined First bank of Nigeria plc where he rose to the position of Deputy General Manager (Finance & Planning).

He became a pioneer Managing Director of Kakawa Discount House Limited in 1995. The position he occupied before joining Union Bank of Nigeria in 1999 as Executive Director (Commercial Banking) and later moved to Corporate and International Banking. He retired from the services of Union Bank in 2006.

CBN appointed his as the interim Chairman of FinBank Plc in June 2008 and later appointed as the Acting Managing Director and Chief Executive of Wema Bank plc.

Funke Osibodu- Union Bank

Mrs Funke Osibodu studied Economics at the University of Ife and is also an Alumnus of the prestigious Harvard Business School.

With over 27 years of banking experience, she has been the Managing Director of two banks, MBC, and more recently Ecobank Nigeria Plc, before becoming a Director in the parent holding company of Ecobank, Ecobank Transnational Incorporated, a position she left in August 2006.

In addition to an excellent banking career, Mrs. Osibodu has held various positions of prominence in the business community and has served in various government appointed committees. As well being a member Vision 2010, she has been a director of ValuCard, Nigeria Interbank Settlement System (NIBSS), Consolidated Discount House Limited, First Securities Discount House Limited, MBC Securities Limited, and ESL Securities Limited.

A recipient of various awards, in the non-financial realm she is also a director in Nigeria Economic Summit Group, Enterprises for Development International, a Non-Governmental Organisation, and the Centre for Law & Business - a private law university.

Nebolisa Arah- AfriBank
Mr. Nebolisa Arah, was the Managing Director/Chief Executive Officer of Fidelity Bank Plc from where he retired recently.Mr. Arah maintains a strong reputation in the banking industry as an achiever.

He holds a Bachelor of Science Degree in Agricultural Economics from the University of Ibadan, as well as Master of Science (Agricultural Economics), Master of Business Administration from Ohio University of Graduate School, Columbus.He is also a member of several professional bodies including Nigeria Economic Summit Group amongst others.

Sussan Iroche- Finbank
Suzanne Olufunke Iroche, (Finbank PLC) has over twenty four years industry experience. An alumnus of Queens' College Yaba Lagos, University of Lagos, Akoka, Yaba and J.L. Kellogg Graduate School of Management, Northwestern University, Evanston, Illinois, U.S.A., she has also attended several management and leadership development courses in some of leading business institutes of the world. Suzzane has extensive experience and knowledge in the areas of Corporate Banking, Treasury and international banking. She is currently the Executive Director of Global Bank Directorate.

Source: www.zibb.com

Nigeria's Minister of State for Finance speaks to Financial Times

Aliko Dangote: New Direction for Nigeria's Bourse

On Thursday, August 6 2009, Alhaji Aliko Dangote of the Dangote business empire was chosen to Preside over the council of the Nigerian Stock Exchange (NSE). As the new President of Nigeria's Bourse, below are excerpts of his acceptance speech to the council:

Distinguished Colleagues in Council,It is with great pleasure and humility that I accept your decision to become the 17th President of the Council of the Nigerian Stock Exchange. I have no doubt whatsoever that without the conviction and support of all of you particularly that of the immediate past President Oba Otudeko and our great Director General who worked tirelessly for the last 10 days, I may not have become the President of The NSE.

I want to sieze this opportunity to thank all of you immensely, particularly the Past Presidents of Council, our indefatigable Director General Professor Ndi Okereke-Onyuike, all Council Members, Stockbrokers, family, friends and well wishers who lavishly gave their support and encouragement to ensure that the proper thing is done and that the esteemed tradition of the Stock Exchange is pursued.

I have no doubt that my tenure as the President of the NSE will be tough and challenging especially because of the global economic downturn, its effect on our economy and our capital market. However I believe that these challenges will provide the opportunity for us to reposition our Stock Exchange and capital market to become the leading Stock Exchange in Africa for capital formation driven by TRANSPARENCY, innovation, efficiency and liquidity.

During my tenure as president I will be guided by the following 5 key themes.

1) Transparency and improved governance of the market
2) Improving the liquidity, turnover and size of the market
3) Enhancing market efficiency by ensuring clearer and updated rules, processes and procedures
4) Provision of world class infrastructure and technology for our market
5) Massive capacity building and rapid skill enhancement of the staff of the Stock Exchange and investor education

The effects of the global financial meltdown and the subsequent massive outflow of investments from our stock market led to a precipitous slide in the value of securities in our market. This has greatly shaken confidence in the market. One of my main tasks will be to begin to restore the confidence of our battered and disillusioned investors once again in the market. This will be accomplished by ensuring that we have a more open and fair market, improving the disclosure standards, forging a closer and better collaboration with other regulators particularly SEC (while still protecting the independence of the NSE). Our zero tolerance regime will be emboldened to ensure speedy penalties on operators who flout our rules. Our surveillance, compliance and enforcement units will be further strenghtened to ensure that they operate optimally. We will update our corporate governance rules not only for our listed companies but also for operators and the Council itself because charity must begin at home.

If the Stock Exchange and its dealing members must continue to remain viable economic units, we must make sure that we increase the liquidity and turnover in the market. One of my first missions will be to lead and intensify discussions with other relevant parties in the economy to put in place a plan to improve the liquidity and turnover in our market particularly in the secondary market. We have to discuss and agree on what to do with the ‘toxic assets’ in our market and very critically how to provide funding for our stockbrokers to refloat their businesses. If we are to compete with other market on the continent, then we have to begin aggressively marketing all the high quality companies in the sub region to make sure that they are listed in our market. I will make sure that we take very concrete steps to ensure that we further deepen and expand our market by introducing other products and attracting more investors. Working with the management of the NSE, I will make sure that we adhere to the timetable to dematerialize the market so that by January 2010 we do not have certificates in our market.

I will ensure that we strictly implement the ongoing enterprise business transformation exercise which is aimed at improving the efficiency in the operations of the market and update the entire business processes of the Stock Exchange. I am aware that the business transformation team is currently working on the detailed operating process for each business unit of the NSE. What is left is to ensure that market rules are reviewed, aligned and harmonized with issuance and trading practices and technology . Given the recent world wide experience, risk issues have now come to the fore in all markets. We have no choice than to increase our focus on ALL RISK issues that are likely to affect our market.

Our technology infrastructure will continue to be central in our competitiveness as a market, therefore starting today, we commence work to decide on the new technology platform which will take our market to the next level. It will include a world –class trading engine, a surveillance platform and all other features required for the efficient running of a capital market. I am aware that the management of the NSE has done a lot of work to improve the physical infrastructure and enabling environment of the NSE building in Lagos. I am informed that we have started fixing the power problems and the elevators in the building. The focus will now be to continue the renovation of the NSE building so that we can give a proper facelift in readiness for our golden jubilee celebrations in a few years time. Finally we will make sure that the security in the NSE building is improved upon and that we continually test our business continuity plans.

Since the stock exchange business is driven by skills and ideas our staff must at all times are abreast of development in global capital markets and stay ahead of the market they supervise. Therefore in line with the business transformation plan we will improve the competency level of every staff of the NSE. Council will approve a capacity building blueprint covering not only our staff but also other market operators before the end of the year.

We realize that investors have options on where they can invest their savings our challenge therefore is to ensure that our market is continuously competitive and attractive to investors and issuers alike.

My fellow colleagues the task of taking our markets to the next level will undoubtedly be quite daunting but I believe that with your cooperation and that of the management of the NSE In-sha Allah we will succeed. Once again I thank you for giving me the opportunity to serve.

The Economies of the Dutch Auction Systems

In January 2009, the former CBN Governor switched the foreign exchange trading to the Retail Dutch Auction System (RDAS) from the old Wholesale Dutch Auction System (WDAS). Exactly six months after that the CBN has gone back to the WDAS; although it was the ex-Governor that set the ball rolling.

What is the difference between the RDAS and the WDAS and how does this difference affect the general economy and in extension the stock market, using the Nigerian Stock Exchange as a proxy? A general explanation will be given in this article and as usual, my view is in favor of the free market.

The Dutch Auction is a type of auction system in which goods (or services) are sold by an auctioneer who starts from the highest possible price. The auctioneer reduces the price gradually until a buyer is willing to purchase the good. It is the opposite of the traditional auction system in which bidding starts from the lowest possible price until no one else is willing to bid above the last highest bid. RDAS and WDAS use the Dutch Auction system.

In RDAS, the banks come to the foreign exchange market with demands from the retail users of the foreign currencies; they usually come with documentations detailing the use of the currencies and there is a restriction on how much can be purchased at a time and how many times in a week (and how long) the market would open. This system was introduced by the CBN in order to protect the foreign reserves from the high demand for foreign currencies as the flight from the Naira to other currencies skyrocketed. This was due to the fact that investors and businessmen were not sure of the direction the Nigerian economy faced, as inflation went into the high teens. Banks came up with restrictions on foreign exchange and successfully starved many end users who needed the foreign currency for legal (and illegal) transactions. This played out into the parallel market as it became the only source of foreign currency for many end users; the gap between the demand and supply led to a large disparity between the official rates (the rates at which the banks bid for the currencies from the CBN) and the parallel rates (also called the black market, which became the only source for many end users).

A black market is usually created whenever regulations restrict market flow. This leads to a deadweight loss as market participants look for ways to fulfill their demands and therefore end up paying more than the regulated price and even the price that would have been, given that there was no regulation. This disparity between official and parallel market became so large that many market players saw an opportunity to make a quick profit by buying at official rates and selling at black market rates. The banks saw this and created more restrictions which ended up with a vicious cycle that worsened the deadweight loss.

In WDAS, the banks go into the foreign exchange market without restrictions (except perhaps the restriction on the percentage of shareholders’ fund that they can take to the market, which is currently 5%) and buy as much as they can afford to resell to the end users. Because of the reduced restriction, there is lot of foreign currency around to fund the demands that are mostly legitimate, but hitherto restricted, and the gap between the parallel rate and official rate collapses as is currently playing out in Nigeria. The arbitrage players see a reduced profit margin and they move on to other businesses and everything goes back to ‘normal’.

The RDAS created volatility in the exchange rates as black market players and illegal transactions made the demand for foreign currency uneven. Foreign investors who were looking at investing in the Nigerian economy saw this volatility and they got scared and decided to stay away. Large local investors who saw this decided to keep their monies in money markets instead of dipping into equities. This led to a reduction in demand for Nigerian equities by foreign investors and reduced investments in businesses. There was also a change in direction of money; black market players who would have invested in equities decided to bid for foreign currencies through the banks by ‘settling’ bank officials and reselling to the black market at higher rates. Legitimate businesses that needed the foreign exchange but could not cross the tight hurdles created by the banks had to source for foreign currencies from the black market but there is a constraint on how much they could pass on the their customers, and coupled with the fact that they also have to generate their own electricity, profit margins were wiped out. Many of the companies listed on the stock exchange that did not have any problems with sourcing for foreign currencies were however affected by the depreciation in Naira and those that depend on businesses that needed foreign currencies for their businesses also faced high cost of inventories, which also saw a slide in profit margins; this led to lower earnings and reduced cash flow, which ended up with lower valuations of stocks on the NSE.

The combination of all these factors with a rising cost of capital created an economic shock, stagflation, which the country is currently battling with and time will tell how the new CBN Governor, Sanusi Lamido Sanusi (SLS), will manage the monetary policy to get Nigeria out of this quagmire.


Source: www.stockmarketnigeria.com

Market Snapshot: What the new MPR means for the market.

Earlier this year, I advised folks via facebook to stock up food stuffs because of the likely inflationary effects of the 2009 federal government budget. So far, food inflation has been on the rise. Figures as of May 2009 showed that food prices had gone up by about 40 basis points (0.40%) from 15.3% in April to 15.7% in May. Although core inflation appears to be down by 10 points from 13.3% to 13.2%, there are fears that if food inflation continues to go up, it might eventually begin to reflect on the core inflation because of its weight in the consumer price index (CPI). Fears of a continous rise in food inflation are coming from speculation by meteriologists that rain is likely to stop earlier this year (www.stockmarketnigeria.com). This will constrain on supply an consequently push up prices. What this means is that consumers can cash-in the real value of their income by buying food stuff in stock in anticipation of a longer dry season but there are inflationary consequencies that come with panic buying.

On the monetary front, the common-year end fever is catching on quite soon. Communique 64 of the Central Bank of Nigeria (CBN) RELEASED ON 7th July 2009 revealed that inter-bank lending rates for April and May were 12.5% and 13.2% respectively. In June, the month when the new CBN Governor, Sanusi Lamido took office, inter-bank rates rose to as high as 18.6% and in the few days of July it ranged between 21-22 percent. Though the CBN is providing guarantee on all inter-bank placements from July 2009 to March 2010, the hostility among banks (reflected in the high inter-bank rates) is expected to continue for a while as banks approach the common year-end on one hand and battle with the bad margin loans littering their balance sheet on the other.

Monetary Policy Rate (MPR) was lowered by 200 basis points from 8% to 6%. There are serious implications for this with regards to the flow of investments in the capital market. Borrowing and lending rates theoretically move in positive correlation with the MPR. Equity investors are interested in these figures because the lower the MPR, the lower borrowing and lending rates but the higher the disposable income available for equity investment. Lower lending and borrowing rates make investments in fixed deposit products less attractive to investors.

On the face of it, investors are expected to look to the equity market but this depend on their perception of risk in the equity market. Investors are increasingly having guided optimism about the stock market. Recently, institutional investors like pension fund managers have taken a 'flight for safety' from equities to government treasuries. There has been some decline in the yields of medium and long-term government bonds. FGN bonds with maturity of 20 years posted a yield of 13.3% in January which is 100 points higher than yields posted by FGN bonds of the same maturity as of the last auction date in June. This means that investors still prefer to take bets on bonds than on equities.

Reduced MPR is expected to affect earnings in the next reporting season. Profits are expected to see a lift as cost of capital is expected to drop. A number of market fundamentals are expected to drive the stock market in the short-term. One is the expectations of positive corporate performance in the next reporting seasons. Another is the change of leadership at the Securities and Exchange Commission (SEC). Market confidence is set to return to the market as analyst believe a new era of professionalism and transparency is set to begin in the market with the appointment of Aruma Oteh as DG of SEC.

After much say about the pros of the drop in MPR, I still think it has been 'recklessly' done as the CBN has given away too much too soon. The CBN appears to be playing too much cards it has in its possession as it is expected to remain very conservative so as not to fuel inflation. Though interest rates may not drop to as low as they are in Europe and the US, it is wise to be careful with lending so that prices in the equity market can be explained by fundamentals and not mere speculation.

Of CBN's stress test and Nigerian banks

The newly appointed governor of the Central Bank of Nigeria (CBN) appeared to have recently sent shivers down the spine of the nigerian banking society through comments he made in an interview granted to the financial times of London. He apparently 'fired' warning shots when he expressed his concern on the asset quality of some Nigerian banks and how he intends to make Nigerian banks disclose their exposure by the December common year end. As a student of the market, I have previously expressed my fears and disbelief about the figures Nigerian banks declare in their balance sheets as assets. It therefore did not come as a surprise when a recent world bank report revealed that half of the assets claimed by nigerian banks are questionable.

Most analysts have previously decried the reckless 'flirt' with risk most banks in Nigeria indulge in especially with regards to exposures to the stock market. We've had a bullish run in this country where banks purportedly gave loans to stockbrokers who speculated on the shares of these banks and consequently drove up the shares of these banks with no particular fundamental justification. We've seen the banks' exposure to the energy sector, particularly oil companies who are practically battling with the decline in global oil prices not to mention to NITEL-Transcorp deal that has recently being rescinded. A consortium of Nigerian banks financed that deal and their exposure to it runs into billions of naira. Yes, that reminds me. Some of our banks have Global Depository Receipts (GDRs) listed on exchanges in New York, London and Johannesburg not also to mention the loan deals some of them signed with foreign banks like Merril Lynch and the likes on Wall Street.

In what seems to appear as a deliberate means to hide their exposures, these banks keep declaring massive profits even during the heat of the stock market crash. For someone like me, their seem to be no form of consistence between rising bank profits and declining stock market fortune and to the dumbest student in a finance class that makes no economic sense. Our banks are quick to tell investors how much turnover they've made and by how much they've multiplied assets but make little or no disclosure as to their risk portfolio which is apparently the most sensitive part of a banks balance sheet. Foreign analysts have also decried the level of secrecy in our banking system and they've pointed that as one major deterrent of foreign investments. Carrying on with this theme, one could point out one of the many failures of the Soludo-led CBN

With a new leadership at the CBN, the CBN seems to have been alerted to its traditional regulatory function of ensuring transparency in the banking system as well as monitoring the risk profiles of banks. Really, bankers should expect nothing less from a man who is popularly known as 'Mr Risk Manager' and I must say at this point that the fear of Mr Risk Manager might be the beginning of survival for some struggling banks. Judging from his manifesto, this man is not ready to wind down the fiscal year with 24 banks under his supervision.

His newly lauched campaign of stress test across the banks is long overdue but it is better late than never. Although the campaign is geared towards making banks come clean on their risk portfolio and consequently 'wiping off' their sins by writing off those loans, it has some major economic implications.

The CBN stress test is already pulling some stress on the stock market and it might be a threat to the little recovery recorded so far. A business newspaper recently reported that banks have given instructions to their subsidiaries to offload their positions in certain shares and this provides some explanation as to why the market lost about N300 bn over the last two trading days. The banks will achieve two things through this: They'll reduce their exposures to the market and make their books clean in expectation of CBN examiners that will come checking soon. Second thing they'll achieve is to cash in on short-term profits of the market which will consequently improve the book value of their assets. But honestly, there is little this 'book patching' by banks can do given that most of the share in the market have not move full swing into a bullish run.

Expect a number of market-induced consolidation in the banking industry as well as with other non-bank financial institutions particularly stockbrokers and investment firms. Much more importantly, expect some banks to declare losses by the december common year end. Some banks might decide to come clean before then but whichever way, now is not the time to be bullish on nigerian banks.

As the CBN settles to reposition banking in Nigeria, there is no doubt that the center of gravity within our financial system is set for a paradigm shift especially with the open invitation given to the more experienced and more capitalized foreign banks.