Banks exposed to Etisalat lose N106bn stock value as investors weigh options

Stocks of banks exposed to Etisalat Thursday lost an estimated N106 billion in value at the Nigerian bourse, according to a compilation by Businessamlive.

Market capitalisation of nine out of the 13 banks exposed to the controversial $1.2 billion Etisalat debt depreciated by N105.74 billion at the close of trading Thursday.

The 225.46 billion shares of the companies saw an average 0.52 percent depreciation, with only United Bank for Africa (UBA) managing to stage a 0.38 percent gain in market capitalisation.

ETI took the biggest beating losing N29.64 billion off its market capitalization as its share price closed lower at N 13.3.

Similarly, Zenith lost N24.17billion in market capitalisation to close lower at N20.43 per share while Guarantee Trust Bank shares shed N29.64billion and closed lower at N34.34.

Another major loser is FBN Holdings, which saw a N9.33 billion drop in value.

Etisalat Nigeria owes Guarantee Trust Bank $138 million, Access Bank $131 million, Fidelity Bank $56 million, Stanbic IBTC Bank $24 million, FCMB  $15 million, Union Bank N3.9 billion, while undisclosed sums are owed to Zenith Bank, First Bank, UBA, Ecobank, Keystone Bank, FSDH, and Mainstreet Bank.

“This is the second day in a row that the banks have faced this predicament and it is clear that as the Etisalat Nigeria issue gets messier, the banks continue to sink in market capitalisation,” a stock broker told Businessamlive on telephone interview.

“It is not impossible that their institutional investors are nursing fears that this issue may not be settled amicably, they may be smelling losses around the corner,” the stock broker who would anonymous remarked.

Etisalat Nigeria, which has not disclosed what it contributes to the Dubai-based parent company (analyst suggests it contributes up to 3.7 percent of revenues to the parent company), took a syndicated dollar-denominated bank loan of $1.2 billion from 13 Nigerian banks in 2013, for the purpose of refinancing an existing loans and funding its network expansion programme.

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A sharp fall in the value of the naira bloated the loan value, making it difficult for the network to meet its repayments schedules.

Talks between Etisalat Nigeria and lenders to restructure the have failed to produce a deal, forcing the banks to step in this month. Etisalat Nigeria’s parent company, which carries 45 percent stake in the Nigerian arm, said on Tuesday it had been ordered to transfer its shares to a loan trustee by June 23, after negotiations failed.

Analysts fear that the banks may not be left off the hook without some form of loss.

The Nigeria telecommunications commission, which regulates the telecoms industry in Nigeria released a statement June 20, saying that the Central Bank of Nigeria (CBN, is holding several meetings with the banks, Etisalat and other stakeholders with a view to finding a resolution