Unclaimed dividends in tier one banks increase by over N5bn
Dividends from shares for investors that are yet to be collected have accrued to over N5bn from January to September 2022, analyses of Q3 financial reports of Nigeria’s tier-1 banks have shown. Daily Trust reports that Nigeria’s tier-1 banks control 70 per cent of the market share in the banking industry, consisting of Access Bank, […]
Dividends from shares for investors that are yet to be collected have accrued to over N5bn from January to September 2022, analyses of Q3 financial reports of Nigeria’s tier-1 banks have shown.
Daily Trust reports that Nigeria’s tier-1 banks control 70 per cent of the market share in the banking industry, consisting of Access Bank, Zenith Bank, Guaranty Trust Bank, First Bank of Nigeria and United Bank for Africa (UBA).
But this report which analysed four of the banks’ financial books, with the exception of GTBank as its unclaimed dividends was not inputted, revealed that the dividends which are liabilities to the banks rose to N92.7bn from the N87bn declared in 2021, an increase of N5.6bn.
A breakdown of the reports indicated that unclaimed dividends for Zenith Bank indicated is yet to change from the N28.6bn it owes its investors since December 2021 with the same figure written in books for September 2022.
For Access Bank, its figure for unclaimed dividends has increased from N34.9 to N36.8bn, an increase of almost N2bn during the time frame.
Similarly, that of First Bank rose from N11.9bn to N14.6bn while UBA’s N114bn has accumulated to N12.6.
The Security and Exchange Commission (SEC) had last year declared that the total amount of unclaimed dividends in the country was to the tune N180 billion as at Dec. 31, 2021, which was a rise of N10bn from the previous year.
The commission, while stating that this figure is just 5 per cent of dividends declared in the entire capital market, expressed commitment to bring unclaimed dividends down to zero per cent in the capital market.
With such a huge amount lying fallow in the books of corporate bodies, the federal government instituted moves to borrow the funds by proposing the Unclaimed Dividend Trust Fund from which it can borrow money to finance its activities in the face of budget deficit that has been reoccurring over the years.
However, the proposal did not sit well with capital market investors who described the move as illegal, maintaining that the monies should be returned into the companies that declared the dividends as the Companies and Allied Matters Act (CAMA) 1990 described dividends as the distributable earnings of a company while those that are not distributed, constitute retained earnings.
Similarly, the act views dividends as unclaimed if it is not collected within six months after a declaration by a company, but allows investors to make claims till 12 years, after which it becomes statute-barred and forfeited.
But to the surprise of investors, the Director General of the SEC, Lamido Yuguda, during a virtual post-Capital Market Committee (CMC) meeting in April last year disclosed that the dividends have finally been moved to the trust fund, which is managed by SEC and the Debt Management Office.
“Unclaimed dividends have gone into the Unclaimed Dividend Trust Fund and are now managed by the SEC and DMO. The SEC is no longer the only institution that has data on unclaimed dividends. It will remain there until the owners come forward to claim them. We still have cases of multiple subscriptions, but we are working very hard on solutions to tackle them, especially in the area of unclaimed dividends,” he said.
Banks need to contact next of kins – Expert
Speaking on what should be done to reduce the rate of unclaimed dividends, a financial expert, Paul Alaje, said the banks should contact the kin of those who have bought shares with them and did not collect their dividends.
Alaje stated that anything could have happened to them as it would be difficult for investors to abandon their dividends when they know the benefits.
“Another thing is that there is this euphoria of everybody going to buy shares at a time. In fact, many people do not know how it works and do not have a broker. They just bought the thing and have the wrong PO Box. When PO Box was no longer in vogue, everybody started moving to digital mailing. Not all Nigerians were able to do that.”
He added that some families did not renew the licence for their mail boxes which was the official channel of communication between them and banks.
On the moves by the federal government to manage the funds, Alaje noted that the federal government has no business in people’s money and the action as just a means to take over people’s assets.
He described it as taking a loan without the consent of the owner and if the government truly wants to help, it should set up a committee to search for the owners of that money.
“The bottom line is that the government just wants to have access to more funds it can lay its hands on. This is compounded with citizens finding challenges to see the evidence of what the money is used for physically. I don’t support the government position and it should stay with the public sector interest and leave the private sector for those that should manage them,” he said.