March 25, 2019

Diamond Bank, Others Record Massive Corporate Governance Fail, Ousted From Index

Diamond Bank, Others Record Massive Corporate Governance Fail, Ousted From Index



The Nigerian Stock Exchange (NSE) has found Diamond Bank Plc, Continental Reinsurance Plc and NEM Insurance Plc wanting in the area of corporate governance and thus removed them from its Corporate Governance Index



It revealed this in a statement on Monday and stated the removal took effect on January 1, 2019.



It said the Index Governance Committee of the Exchange resolved to remove NEM Insurance following the suspension of the Corporate Governance Rating System rating of the company by the steering board of the CGRS on November 19, 2018.




The statement read in part, ‘Additionally, in view of the recent governance issues with Diamond Bank, the Index Committee has decided to remove the bank from the NSE CG Index.




‘The committee also decided to remove Continental Reinsurance from the NSE CG Index following the company’s application to the Exchange to delist from the daily official list of the Exchange.’




According to the statement, the CG Index, which was launched on February 22, 2018, tracks the performance of CGRS-rated companies using their market capitalisation, free float, and corporate governance rating scores.


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It said the index was expected to be an important tool for investors keen on investing in well-governed companies as well as corporates eager to distinguish themselves on the ground of governance.




The NSE also announced the review of the NSE-30 and the eight sectoral indices ― NSE Consumer Goods, NSE Banking, NSE Insurance, NSE Industrial, NSE Oil & Gas, NSE Pension, NSE Lotus Islamic and NSE Corporate Governance Indices.




According to a statement, the composition of the indices is effective January 1, 2019, after the completion of the year-end review and index rebalancing exercise, which will see the entry of some major companies and the exit of others from the various indices.




The local bourse said Sterling Bank Plc would be included in the NSE-30 Index, while Beta Glass Company Plc would be removed.




It said Diamond Bank would be removed from the NSE Banking Index, while Jaiz Bank Plc would be included.




Under the NSE Insurance Index, Continental Reinsurance Plc, Staco Insurance Plc and Standard Alliance Insurance Plc would be removed, while Consolidated Hallmark Insurance Plc, Sovereign Trust Insurance Plc and Regency Assurance Plc would be added.




Meanwhile, Diamond Bank Plc, Continental Reinsurance Plc and Ecobank International Incorporated would be removed from the NSE Pension Index, while Cement Company of Northern Nigeria Plc, Beta Glass and Julius Berger Plc would be added.




Under the NSE Oil/Gas Index, Eterna Plc would be replaced by MRS Oil Nigeria Plc.




However, under the consumer goods and industrial goods indices, there were no changes.




The NSE said, ‘The indices, which were developed using the market capitalisation methodology, are rebalanced on a biannual basis, the first business day in January and in July.




‘The stocks are selected based on market capitalisation and liquidity. The liquidity is based on the number of days the stock is traded during the preceding two quarters. To be included in the index, the stock must have traded for at least 70 percent of the number of trading days in the preceding two quarters.’

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