Banks’ shares have rallied after two lenders fired almost 3,000 workers between them, and after shareholders of Fidelity Bank Nigeria and First City Monument Bank Plc approved bond sales.

Intercontinental Bank Plc advanced for the first day in 13, adding 46 per cent to close at N1.36 after it sacked 1,339 staff on December 18.

The shares had declined 89 per cent this year shares in Oceanic Bank International Plc, which had fallen 87 per cent in 2009, posted their steepest two-day rise in more than a month and advanced 4.5 per cent to close at N1.40 after the bank fired 1,500 employees.

The banks led a gain of as much as 1.7 per cent in the Nigerian Stock Exchange’s Banking index, its biggest intra-day rise since November 11. The index has lost 37 per cent this year and closed 0.6 per cent higher.

“the only thing banks can do is look at their cost structures since revenue insn’t growing”,

Bismarck Rewane, the Chief Executive Officer of Financial Derivatives and a number of the committee set up by the government to advise it on Nigeria’s response to the global financial crisis, said “It’s a welcome development. They have to reduce cost”.

The dismissals form part of a shake-up following an audit by the Central Bank of Nigeria in August and September, which resulted in Governor Lamido Sanusi, firing chief executives of both banks and six others and injecting at least N620 billion naira ($4.12 billion) into 10 banks including intercontinental and Oceanic; to boost their capital and Liquidity.

Nigeria’s All-Share Index, is the second-worst performer of 90 benchmark equity indexes on Bloomberg this year, after Ghana plunged 34 per cent in 2009 and 46 per cent last year.

Banks dragged the index down on concern they may have as much as $10 billion toxic assets, according to data in May from Eurasia group, a New York-based research company.

As much as two thirds of the bad debt is the result of a least N1 trillion of margin loans used to buy equities as they soared almost 13-fold since 2000.

Fidelity Bank headed for its highest close in two weeks, climbing 3.2 per cent to N2.58 after shareholders approved a N200 billion ($1.3 billion) bond sale on December 21. First City shareholders gave permission for the lender to raise N100 billion through a bond sale on December 16, company spokesman, Tunde Shofowora, said by phone from Lagos. The shares increased for the first day in four, adding 3.7 per cent to N7.19.

The two lenders are following Nigeria’s four biggest by raising funds through debt sales.

First Bank of Nigeria Plc, the West African nation’s biggest company by market value, will issue N500 billion in bonds after shareholders approved the sale on October 8.

Zenith Bank Limited, the second-biggest lender, will raise N300 billion following approval at a meeting on October 30, spokesman Timi Ejoor, said by phone.

Guaranty Trust Bank Plc, the third biggest, started a five year, naira-denominated bond issue on December 9, while United Bank for Africa Plc, the fourth-biggest lender, received the go-ahead to raise N500 billion through a bond sale on October 2.

The Nigerian bank shake-up may create opportunities for buyers. Standard Bank Group Limited, Africa’s largest lender, is looking at Nigeria for possible acquisition opportunities as the banking crisis slashed valuations, Johannesburg-based spokesman Eric Larsen, said.

Old Mutual Plc, the biggest insurer on the continent, seeks to follow smaller rivals such as Liberty Holdings Limited and FirstRand Limited into Africa, including Nigeria, to boost growth and make up for losses in its U.S business.