CBN’s suspension of banks’ dividend may cause stock market volatility- ASHON

The Association of Securities Dealing Houses of Nigeria (ASHON) has raised concerns over the Central Bank of Nigeria’s (CBN) recent circular temporarily suspending dividend payments by banks.

In a statement issued on Tuesday, ASHON Chairman, Mr Sam Onukwue, said the directive, released on 13 June, was reportedly intended to enforce compliance with regulatory forbearance measures and the Single Obligor Limit (SOL) requirements.

He described the timing of the announcement as unfortunate, particularly as banks are currently working to meet the new, regulator-imposed minimum capital requirements.

"The release of this price-sensitive information has sparked surprise and concern because of its possible repercussions for shareholders and the broader equities market,” Onukwue stated.

He warned that the indefinite nature of the suspension could dent investor trust in the banking sector and may prompt a sell-off of bank stocks on the Nigerian Exchange Limited (NGX), where financial institutions typically dominate daily trading activity.

ASHON noted that the central bank might have handled the matter with greater tact to avoid fuelling market uncertainty.

"Without an alternative strategy, this directive could impede banks' ability to raise the necessary capital, especially for those institutions that are yet to begin their recapitalisation efforts before the stipulated deadline,” Onukwue added.