SEC Axes Ecobank from Capital Market Activities over Loan

Securities and Exchange Commission (SEC) yesterday suspended Ecobank Plc from all capital market activities because of irregularities surrounding a loan.

SEC said in a statement that Ecobank’s client Arian Capital Management, a stock broking firm, had used capital from another company without that company's permission as collateral for a loan from Ecobank Plc.

However, in swift reaction, the bank said its suspension would not affect its business, because Ecobank Nigeria does not itself deal in capital markets.

The SEC statement said Arian had taken shares belonging to Avil Services LTD and used them as collateral for an Ecobank margin loan facility without Avil's permission, withholding the shares and accruals from Avil.

It subsequently suspended Arian for its actions.

"The SEC ... requested further explanation from Ecobank Nigeria Plc. This explanation is yet to come from Ecobank Nigeria Plc despite repeated demands for it," the SEC said in a statement.

"The suspension will continue to be in force until the bank clears all the issues," it said.

Meanwhile, Adenike Laoye, Ecobank Nigeria spokeswoman said the bank takes payments for retail participation in initial public offerings (IPOs), but does not deal in the secondary market.

"We actually don't carry out capital market activities any more. In terms of the business it's not affecting us," she said.

Laoye said the dispute concerned shares valued at 11 million naira ($69,300), and that Ecobank did not know that Arian did not own the shares. She said they had issued a cheque to the SEC to settle the amount on Thursday.

Pan-African banking group Ecobank has a presence in 32 African countries and around 9.4 million customers, some 6.4 million of them in Nigeria. Its operation in Nigeria, Africa's second biggest economy, makes up the lion's share of its business. Nigeria makes up about 44 percent of assets and revenue and 35 percent of its loans. ($1 = N158.8000).