Shareholders in 14 weak banks that failed to meet the new minimum capital base of N25 billion might have lost about N50 billion in earnings and capital appreciation.

Market analysts predict that this could dampen the morale of investors and long-term goal of deepening the market by attracting new investors both from within and outside the country. It could also discourage investors with aversion to risk to reduce their portfolio of banking stocks.

The Central Bank of Nigeria (CBN) estimates that some N335 billion are currently under liquidation given the last statutory returns of the 14 banks under liquidation. The apex bank, in its latest monthly report, said the total assets/liabilities of the 25 new banks that emerged after consolidation stood at N4,694 billion by January month end but the total figure could rise to N5,029 billion where the last returns of the 14 banks under liquidation were considered.

Average equity/ total assets ratio in the pre-consolidation banking industry, which applies to the banks under liquidation, stood at 11 per cent, implying that equity resources out of the N335 billion assets under liquidation could be about N37 billion. Market analysts estimated that investors had lost about N13 billion in possible capital appreciation.

The Nigerian Stock Exchange (NSE), early last month, delisted six of the 14 banks which were quoted on the NSE in apparent confirmation of the irretrievable liquidation of the banks. The six banks included African Express Bank, Gulf Bank of Nigeria, Hallmark Bank, Liberty Bank, Savannah Bank and Trade Bank Plc. Other banks under liquidation are Allstates Trust Bank, Assurance Bank, Lead Bank, Societe Generale Bank, City Express Bank, Eagle Bank, Fortune International Bank and Metropolitan Bank Limited. The CBN and the Nigerian Deposit Insurance Corporation (NDIC), which is undertaking the liquidation of the banks, have assured depositors on the payment of deposits up to the maximum insured deposit limit. Securities and Exchange Commission (Sec) also said the subscriptions of some investors to the offers of some of the banks under liquidation, including Allstates Trust Bank and Trade Bank, would be fully refunded as they are in special accounts with the CBN.

Hard hit by the liquidation are small and medium minority shareholders who see low-priced banking stocks as investment channels. Employees of the banks are also in precarious situation with many life savings under employee trust schemes gone with the insolvency of the banks. Employees of Allstates Trust Bank under Allstates Employee Trust were the second largest shareholders of the bank controlling 8.70 per cent of its equity. Also, Trade Bank Trustee Scheme, representing employees, has 8.82 per cent equity stake in the bank being the third largest shareholder.