CBN shifts deadline for banks adoption of common year end
The Central Bank of Nigeria (CBN) yesterday shifted the deadline for Banks to adopt a uniform accounting year end to December 2009. This according to CBN was in response to “irrational behavior” of some banks in their attempt to mobilize deposits. The direct impact of this announcement could at least ease the current strain in liquidity created in a bidding continuum following the banking industry’s battle for deposits.
This could unravel a long sought key to unlock institutional funds. The key to market recovery in our view remains a total change in general mindset. We perceived that prevailing sentiment has been largely speculative and short-term, which has consistently denied the market the so desired rally and momentum. We can’t conclude without pointing out that this has, in a way, present opportunities for investors seeking long positions as some equities are currently trading in their oversold bands. Here is CSL Securities’ view of the impact of this announcement:
In our opinion, The CBN postponement by one year for banks to converge their year end may offer a respite both for the banking sector directly and also the capital market as the sector constitutes above 60% of the market capitalization of the Nigerian Stock Exchange. While the banks may heave a sigh of relief, stakeholders, especially Nigeria’s foreign partners and investors may worry about the credibility of CBN or question the decision-making process of the industry regulator, as policy somersaults have been the bane of the country both in the past and in the present times.
It can be hoped that Nigerian banks will put on their thinking caps to utilize this window of time extension to ensure an orderly convergence without doing damage to the banking sector and the economy as a whole. We also hope that regulatory authorities and managers of the Nigerian project will be more consultative and engaging with industry operators and stakeholders in making major policy decisions that impact on the economy.
Banks, News | 
donne4real | July 24, 2008