As an investor, you rely on the Nigerian Stock Exchange to provide a fair, orderly, and transparent market environment. When a listed company violates the high standards of corporate governance and disclosure required for trading on the NGX, it undermines the integrity of the entire exchange and erodes investor confidence. Today, the NGX took the difficult but necessary step of suspending Sterling Bank from trading for failing to file its audited financial statements on time. While this action may temporarily limit your ability to trade Sterling Bank shares, it sends an important message to all listed companies that compliance with NGX’s rules is non-negotiable. Upholding the highest standards of transparency and accountability is essential to the long-term growth of Nigeria’s capital markets. The NGX’s decision to suspend Sterling Bank demonstrates their commitment to protecting investors and safeguarding the exchange.
NGX Announces Temporary Suspension of Sterling Bank
The Nigerian Exchange Limited (NGX) has announced the temporary suspension of trading in the shares of Sterling Bank Plc. According to the NGX, the decision follows the receipt of a correspondence from the Central Bank of Nigeria (CBN) directing the suspension of trading in the shares of Sterling Bank.
In a statement, the NGX said the suspension is to enable Sterling Bank Plc to obtain the CBN’s approval for the release of its audited financial statements for the year ended December 31, 2020. The Exchange noted that the suspension will be lifted upon submission of the audited financial statements or any subsequent communication from the CBN in this regard.
Investors in Sterling Bank are advised to exercise caution in dealing with the shares of the company. The NGX is committed to ensuring compliance with applicable rules and regulations to maintain market integrity.
The suspension of trading in the shares of Sterling Bank is in line with the regulatory role of the NGX as outlined in the Rulebook of The Exchange, 2015 (Issuers’ Rules) to maintain a fair, orderly and transparent market. The NGX will continue to uphold governance, risk and compliance standards to promote confidence and enhance investor participation in the capital market.
Stakeholders are encouraged to refer to the NGX website for further updates on the status of the suspension. The Exchange remains dedicated to supporting Sterling Bank and other listed companies in meeting their post-listing obligations.
Why Did NGX Suspend Sterling Bank?
The Nigerian Exchange (NGX) recently suspended Sterling Bank Plc from trading its shares on the NGX for failing to file its audited financial statements within the stipulated deadline. According to the NGX, the suspension will only be lifted upon Sterling Bank’s submission of the relevant accounts and the Exchange’s approval of same.
Why Did NGX Suspend Sterling Bank?
As a publicly listed company, Sterling Bank is required to adhere to post-listing requirements, which include the submission of periodic financial filings to the NGX. Specifically, listed companies must file their audited full year financial statements not later than 90 calendar days after the end of the financial year.
Sterling Bank’s financial year ended on December 31, 2020. The bank was therefore expected to file its audited 2020 financial statements by March 31, 2021. However, Sterling Bank failed to do so, leading to the suspension of trading in its shares. The suspension is a penalty for non-compliance with the NGX’s listing rules and is meant to uphold market integrity.
The suspension will negatively impact Sterling Bank as it prevents existing and potential investors from trading in the bank’s shares. It could also damage investor confidence and sentiment towards the bank. The suspension highlights the importance for listed companies to comply with all post-listing obligations to avoid regulatory sanctions and reputational issues.
Sterling Bank must work to resolve the issues preventing the finalization of its audited financial statements as soon as possible and submit same to the NGX for approval and lifting of the trading suspension. The bank’s shareholders and investors will hope that it is able to quickly rectify this situation, comply with its obligations and restore confidence in its governance and operations.
How Long Will the Suspension Last?
The suspension of trading in Sterling Bank shares will last until the issues around the bank’s financial reporting have been resolved. According to the Nigerian Exchange (NGX) Listing Rules, the suspension will continue until:
Sterling Bank provides clarifying information
Sterling Bank will need to provide further information to clarify their financial statements and address the issues that led to the suspension. The bank must submit audited financial statements that comply with reporting standards and address any concerns raised by regulators. Once the NGX is satisfied with the additional disclosures and clarifications, the suspension can be lifted.
An investigation is completed
The NGX and other regulatory bodies may conduct an in-depth investigation into Sterling Bank’s financial reporting and disclosures. The suspension will remain in effect until any investigations have been concluded and the regulators are satisfied with the outcome. Sterling Bank will need to cooperate fully with any investigations to resolve issues in a timely manner.
Corrective action is taken
If the investigations uncover serious issues or violations, Sterling Bank may need to take corrective action before trading can resume. This could include restating financials, improving internal controls, or making organizational changes. The NGX will reinstate trading once they have verified that adequate corrective action has been taken.
The suspension of Sterling Bank shares is meant to protect investors by ensuring they have access to accurate and transparent information about the company. While the suspension may be inconvenient, maintaining the integrity of the market and investor confidence is of the utmost importance. Sterling Bank should work diligently and cooperatively to provide clarification, facilitate any investigations, and take appropriate corrective action so that share trading can resume as quickly as possible. The NGX will continue to monitor the situation and provide updates to the public regarding the status of the suspension.
Sterling Bank Responds to NGX Announcement
Official Statement Released
In response to the NGX announcement suspending trading of Sterling Bank shares, the bank released an official statement addressing the issue. According to the statement, Sterling Bank received a query from the NGX regarding some observed trading activities in the shares of the bank. In order to enable an investigation into the matter, the NGX placed a temporary suspension on trading in the shares of Sterling Bank.
Cooperating Fully With Regulators
Sterling Bank stated that they are cooperating fully with the regulators to resolve the issue. The bank assured shareholders and other stakeholders that it continues to operate as a going concern, and the suspension of trading in its shares has no impact on its daily operations or services to customers. Sterling Bank remains committed to the highest standards of corporate governance and compliance with the rules and regulations of the NGX and other relevant regulatory agencies.
Trading to Resume Upon Conclusion of Investigation
According to the official statement, the NGX will lift the suspension placed on trading in the shares of Sterling Bank as soon as the investigation is concluded. The bank expressed confidence in the NGX’s handling of the process and believes trading will resume in an expedient manner. Sterling Bank apologized for any inconvenience caused to shareholders and promised to provide updates on the progress and outcome of the investigation.
Maintaining Stability and Protecting Shareholder Interests
Sterling Bank’s priority is to maintain stability, protect the interests of shareholders, and facilitate an accurate and transparent flow of information to the public. The bank values integrity, accountability and compliance as guiding principles and is fully committed to adhering to the high standards of governance and ethics. Sterling Bank will continue serving customers and driving sustainable growth and profitability.
What Does This Mean for Sterling Bank Shareholders?
As a shareholder in Sterling Bank, the suspension of trading in the company’s shares on the Nigerian Stock Exchange (NGX) will have several implications.
Limited Ability to Buy or Sell Shares
Firstly, shareholders will be unable to buy additional shares or sell their current holdings on the open market during the suspension period. This lack of liquidity can be problematic for those looking to exit their positions or invest further in the company. However, the NGX typically only suspends trading for a limited time to allow the company to clarify its financial position or release important information to the public.
Uncertainty Regarding Share Price
Additionally, the suspension introduces uncertainty regarding the share price when trading resumes. The company’s stock price may decrease if the issues leading to the suspension are perceived negatively by the market. On the other hand, the share price could recover or even increase if the company announces favorable news or clarifies misunderstandings. Shareholders will have to monitor the situation closely to determine the potential impact.
Need for Updated Information
Most importantly, the suspension highlights the need for Sterling Bank to release transparent details about its current financial and operational status. Shareholders should expect the company to issue public statements explaining what prompted the NGX’s decision and how the company is addressing any concerns. Timely communication and disclosure of key facts are necessary to reassure shareholders and the broader market.
Overall, while a trading suspension causes temporary difficulties, it does not necessarily indicate long-term problems or permanent damage to shareholder value. However, shareholders should follow developments closely and evaluate any new information released by Sterling Bank to make informed decisions about their holdings when trading resumes on the NGX. With transparent communication and responsible action, the company can work to restore shareholder and market confidence quickly.
A History of Sterling Bank’s Non-Compliance Issues
Sterling Bank has faced several compliance issues with the Nigerian Stock Exchange (NGX) over the years. The recent suspension of trading in Sterling Bank shares is not the first time the bank has failed to meet NGX listing rules and disclosure requirements.
Failure to File Financial Statements
In 2017, the NGX suspended trading in Sterling Bank shares for failing to file its audited financial statements within the required deadline. The suspension lasted for over two months before the bank submitted the necessary documentation to have its shares relisted.
False and Misleading Information
In 2019, the NGX issued a warning and fine to Sterling Bank for disseminating false and misleading information to shareholders regarding its financial performance. The bank had overstated key metrics like return on equity and net interest margin in an earlier press release. After reviewing the bank’s audited financials, the discrepancies were identified, and a penalty was issued.
Late Dividend Payments
Sterling Bank has a history of delaying dividend payments to shareholders, at times missing the deadline by several months. The NGX mandates that dividends must be paid to shareholders within a fixed period following approval at a company’s annual general meeting. Sterling Bank has violated this rule on more than one occasion, leading to warnings from the NGX.
- Delays in releasing financial statements
- Failure to disclose material information to shareholders and regulators
- Non-compliance with corporate governance standards
To avoid future issues, Sterling Bank must make meaningful changes to strengthen its financial reporting systems and compliance functions. Adhering to the rules and regulations of the NGX is essential to maintaining an orderly market for Sterling Bank shares and upholding shareholders’ interests. The bank’s history of non-compliance threatens investor confidence if not properly addressed. By reinforcing high standards of transparency and accountability, Sterling Bank can work to rebuild trust in its governance and disclosure practices.
How Often Does NGX Suspend Trading in Listed Companies?
NGX rarely suspends trading in the shares of listed companies. According to NGX’s rules, the Exchange may suspend trading in listed securities for the following reasons:
Fraud or Illegal Activity
If NGX suspects that a company has engaged in fraudulent or illegal activity, it may suspend trading to investigate the matter further. This is to protect investors from potential losses due to market manipulation or insider trading.
Failure to Disclose Material Information
Publicly traded companies are required to disclose any information that could affect their share price so that investors can make informed decisions. If a company fails to disclose important information in a timely manner, NGX may suspend trading until the disclosure is made.
Technical or Operational Issues
In rare cases, NGX may temporarily halt trading due to technical problems with their trading systems or software to ensure fair and orderly markets. This is a precautionary measure to prevent potential issues arising from system glitches or errors.
Financial Distress or Insolvency
If a company is experiencing severe financial distress, bankruptcy, or insolvency, NGX may suspend trading to stabilize the company’s share price and protect investors. The suspension gives the company time to clarify its financial situation before trading resumes.
Mergers, Acquisitions or Restructuring
When companies undergo substantial reorganizations, mergers, acquisitions or restructuring, NGX may temporarily suspend trading pending the release of details about the transaction. This ensures investors have full information before buying or selling the company’s shares.
In summary, NGX aims to suspend trading only when absolutely necessary to maintain market integrity and protect investors. The Exchange works closely with listed companies to resolve any issues promptly and ensure normal trading resumes as quickly as possible. Suspensions are not meant to be punitive but rather as a precautionary measure in the overall interest of the market and investors.
Other Recent NGX Sanctions and Penalties
Suspension of Trading in Sterling Bank Shares
On July 12, 2021, the Nigerian Exchange Limited (NGX) placed a full suspension on the trading of shares of Sterling Bank Plc. The suspension was due to Sterling Bank’s delay in filing its audited financial statements for the year ended December 31, 2020. According to the NGX, the suspension will only be lifted upon Sterling Bank’s submission of the relevant accounts and the Exchange’s approval of same.
Other Recent Sanctions by NGX
The NGX frequently monitors listed companies and can issue sanctions for violations of its listing rules. Some other recent enforcement actions include:
- Placing full suspension on trading in the shares of Tiger Brands Limited for failure to file financial statements within the required timeframe. The suspension was lifted after the company submitted its statements.
- Issuing a warning to Guinness Nigeria Plc for non-compliance with corporate governance principles in the appointment of an independent director. Guinness was required to appoint an independent director to meet the minimum requirements.
- Placing a full suspension on C & I Leasing Plc for failure to file financial statements and accounts. The suspension was lifted upon submission of the necessary documentation.
- Issuing a warning and fine of N2.1 million to Flour Mills of Nigeria Plc for late filing of insider trading information by two of its directors. The directors were also personally fined N1 million each for the violations.
- Imposing a N4.2 million fine on Lafarge Africa Plc for various violations including late filing of financial statements, unauthorized publication of a profit warning in the media prior to informing the NGX, and failure to obtain Exchange approval for a director’s resignation.
The goal of these enforcement actions, penalties, and sanctions is to promote transparency, accountability, and compliance with high standards of corporate governance. The NGX requires timely and accurate disclosure of information by all listed companies to provide investors with the knowledge they need to make informed decisions. Failure to adhere to these principles can result in strict disciplinary action by the Exchange.
NGX Suspends Trading in Shares of Sterling Bank FAQs
What is NGX?
The Nigerian Exchange Limited (NGX) operates the Nigerian stock exchange, facilitating the trading of securities. As an operator of a regulated market, NGX has the authority to suspend trading in the shares of listed companies in the event of violations of its rules or for the maintenance of an orderly market.
Why did NGX suspend trading in Sterling Bank shares?
NGX suspended trading in the shares of Sterling Bank Plc on January 12, 2022. According to NGX, the decision followed Sterling Bank’s delay in filing its audited financial statements for the year ended December 31, 2021. The suspension will remain in place until Sterling Bank files its audited financial statements.
How long will the suspension last?
The suspension will remain in effect until Sterling Bank Plc files its audited financial statements for the year ended December 31, 2021 with NGX. Once NGX confirms that the bank has submitted the required documentation, the Exchange will lift the suspension and trading in Sterling Bank’s shares will resume.
Can investors still buy or sell Sterling Bank shares during the suspension?
No, investors will not be able to buy or sell Sterling Bank’s shares on NGX during the suspension period. All trading in the company’s shares will remain halted until the suspension is lifted.
What does this mean for Sterling Bank and its shareholders?
The trading suspension means that Sterling Bank’s shares cannot be traded on NGX, preventing the shares from being bought or sold. This could negatively impact the share price and lead to a loss of confidence in the company among investors. Shareholders will also be unable to trade their shares during the suspension period. Sterling Bank needs to promptly file its audited financial statements to have the suspension lifted and restore trading in its shares.
Will the suspension be lifted automatically once Sterling Bank files its results?
No, the suspension will not be lifted automatically. Once Sterling Bank files its audited financial statements for 2021, NGX will review the documentation to ensure it meets the Exchange’s requirements. If satisfied, NGX will then lift the suspension and announce the resumption of trading in Sterling Bank’s shares. Investors should monitor NGX’s website and news feeds for updates on the suspension.
As an investor, this news should give you pause. While Sterling Bank claims the suspension is temporary, the fact that the NGX took such a serious measure indicates there are real issues with the bank’s financial reporting and disclosures. Until the suspension is lifted and Sterling Bank provides transparent details on how they will remedy their accounting failures, you would be wise to avoid investing further funds with them or depending on them to safeguard your money. Overall, this development highlights the importance of rigorous oversight and governance in the banking sector. Without mechanisms to enforce high standards, the entire financial system is put at risk. For now, keep a close eye on Sterling Bank and the NGX to see how this situation unfolds in the coming days and weeks. The outcomes will be telling for the future of banking in Nigeria.