The major insiders and directors in various banks have launched subtle moves to secure higher stakes as the recapitalisation process gathers momentum.
Trading reports at the Nigerian Stock market have shown a surge in insiders’ transactions with most deals concentrated on banking stocks.
Regulatory reports by the Nigerian Exchange (NGX) at the weekend showed that two-thirds of companies that reported insiders’ acquisition of shares last week were banks, which accounted for the largest volume and value of insiders’ transactions. This was consistent with similar trends in recent weeks.
The banks’ shares were mostly being acquired by major shareholders, directors and senior management members and their relatives, who by virtue of their closeness to the banks, are classified as insiders under the extant rules at the capital market.
All recent bank-related insider dealings were for purchase of shares, rather than sale, forming a pattern of transactions that targets some major commercial banks.
Banks accounted for 66.7 per cent of total number of companies that recorded insiders’ dealings last week and half of the total number of reported deals.
A four-week review also showed similar trend of spike in insiders’ transactions on banking stocks.
Sources said major shareholders are taking preemptive moves in preparation for expected rights issues by banks.
Rights issue is traditionally pre-allotted on the basis of existing shareholdings and in most instances, offered at discount to existing shareholders.
A senior investment banker, who pleaded anonymity because of closeness to some transactions, said banks’ insiders were taking positions to benefit from the recapitalisation offers, through higher stakes or a tradeoff of the discounts on their rights.