As the second round of capital raising exercise kicks off, four banks will be looking to raise about N931.91bn in fresh capital to meet the new capital base required for banks operating in Nigeria.
These banks include national lenders like Wema Bank and Stanbic IBTC Holdings.
Others have international authorisation, like FCMB Group and Fidelity Bank.
In the past week, Wema Bank announced that it would be raising N200bn through a combination of a rights issue and a special placement exercise set to go live on April 1, 2025, in a bid to complete its capital raise exercise.
The Managing Director of Wema Bank, Moruf Oseni, had in the past revealed that the bank would be aiming to maintain its national banking license, expressing confidence that the bank would have a successful outing in its capital-raising endeavours.
He said, “We stand strong today not just as Nigeria’s oldest indigenous bank but also as Nigeria’s leading innovative bank. Wema Bank turns 80 this year, and I can safely tell you that we have never been more driven to excel. I am blessed to lead with the support of a team of determined and driven professionals who will leave no stone unturned in achieving our strategic aspirations. Indeed, we are building Wema Bank into a formidable force in the African financial services landscape.
“We remain dedicated to maintaining transparency throughout this process and will provide regular updates to all stakeholders and shareholders as we go forward. This capital raise will be a win-win for us all. You can trust, as always, that your investment in Wema Bank will produce exceeding returns. This is our promise to you.”
Recall that Wema Bank had a N40bn rights issue in December 2023, which received regulatory approval in 2024.
Stanbic IBTC Holdings on Tuesday at the Nigerian Exchange Limited revealed that the majority of the proceeds of its ongoing N148.7bn rights issue would be going to its banking subsidiary, Stanbic IBTC Bank, to meet the new capital requirement.
Shareholders of the lender had approved an N150bn additional equity capital raise at its 12th Annual General Meeting in May 2024 in Lagos.
The shareholders also resolved that following the completion of the additional equity capital raise, the issued and paid-up share capital of the company be increased from N6.48bn divided into 12,956,997,163 ordinary shares of 50 Kobo each to a maximum of up to N8.25bn via the creation of up to 3,543,002,837 ordinary shares of 50 Kobo each.
According to the lender’s third-quarter results, its share capital and share premium, which are recognised as components of the bank’s capital per the Central Bank of Nigeria requirements, stood at N109.26bn, indicating that the bank needs about N90.74bn to meet the new capital threshold.
Hence this capital raise will enable the bank to comfortably meet and surpass the CBN regulations.
The offering, which opened on January 15 and will close on February 21, 2025, allows existing shareholders to subscribe to 2,944,772,083 ordinary shares of 50 kobo each at N50.50 per share, structured as five new shares for every 22 ordinary shares held as of October 29, 2024.
Acting Chief Executive of Stanbic IBTC Holdings Plc, Kunle Adedeji, emphasised that the funds raised would drive growth in critical sectors such as oil and gas, with a focus on liquefied petroleum gas, compressed natural gas, and gas infrastructure.
The proceeds will also support power sector reforms, including divestments in distribution companies and exploring opportunities in the debt capital market and sustainable finance to foster economic transformation.
Meanwhile, FCMB Group, which has successfully raised N147.51bn in its public offer in 2024, has revealed that it would still be looking to raise additional funds.
At its extraordinary virtual general meeting, shareholders of FCMB resolved to increase the authorised additional capital raise of the company from N150bn to N340bn.
Referring to the resolution of the meeting on increasing the capital to be raised, the shareholders authorised the company “to raise capital of up to $15m or its equivalent in Nigerian naira via a mandatory convertible loan offered to a select group of qualified investors and that the mandatory convertible loan, inclusive of any accrued interest, be converted into ordinary shares of the company on such terms and conditions as the board may deem fit, subject to obtaining the requisite approvals of the relevant regulatory authorities.”
The resolutions that were filed with the NGX also revealed that shareholders okayed the divestment of a portion of the company’s stake in one or more of its subsidiaries as it may see fit and investment of such portions of the proceeds of the divestments into its flagship, First City Monument Bank Limited.
Fidelity Bank, which was the first to test the waters of the capital market to raise funds in mid-2024, looks likely to return to the market to raise about N243.19bn to maintain its international license.
Its third-quarter report indicated that its share capital was N129.71bn, meaning that Fidelity Bank needed to raise a total of N370.29bn to meet the regulatory requirement.
Although yet to reveal information about its allotment, the bank said that its N127bn combined rights issue and public offer were oversubscribed; thus, it will likely return to the market this year to raise the remaining funds.
Another national bank likely to come to the market this year is Sterling Bank, which has thus far raised funds via a rights issue, got N75bn via private placement, and promised a public offer this year.
In a statement announcing regulatory approval for its private placement last year, the bank stated, “It is anticipated that the recapitalisation process will be completed with a public offer early next year, allowing wider participation from the public and further strengthening its commitment to shared value creation.”
The CBN had, in a circular to commercial, merchant, and non-interest banks and promoters of new banks, in late March announced the review of the capital requirements for the operations of the affected categories of banks in the country.
Citing both domestic and global shocks, the apex bank, in a statement signed by its Acting Director, Corporate Communications, Sidi Ali, said it had become necessary to raise the capital base of the banks.
Thus, the CBN directed commercial banks with international authorisation to increase their capital base to N500bn and national banks to N200bn, while those with regional authorisation are expected to achieve a N50bn capital floor. Similarly, non-interest banks with national and regional authorisations will need to increase their capital to N20bn and N10bn, respectively.
According to the CBN circular, only the share capital and share premium items on the Shareholder Fund portion of the balance sheet will be recognised in this particular round of recapitalisation.
The apex bank circular read, “For existing banks, a. The minimum capital specified above shall comprise paid-up capital and share premium only. For the avoidance of doubt, the new capital requirement shall NOT be based on the shareholders’ fund. b. Additional Tier 1 Capital shall not be eligible for the purpose of meeting the new requirement. c. All banks are required to meet the minimum capital requirement within a period of 24 months commencing from April 1, 2024, and terminating on March 31, 2026. d. Notwithstanding the capital increase, banks are to ensure strict compliance with the minimum capital adequacy ratio requirement applicable to their license authorisation. e. In line with extant regulations, banks that breach the CAR requirement shall be required to inject fresh capital to regularise their position.”
The Managing Director/Chief Executive Officer of Arthur Stevens Asset Management Limited and former President of the Chartered Institute of Stockbrokers, Olatunde Amolegbe, during the review of 2024 economic activity and expectations in 2025 of the Capital Market Correspondents Association of Nigeria, themed, ‘In-Depth Evaluation of the Capital Market in 2024 and Prognosis for 2025,’ said that the banking sector recapitalisation will be largely completed this year.
“We expect that the recapitalisation of banks will be largely completed by 2025, even though the official deadline is in 2026. Most major banks are likely to finalise their processes and list their shares between 2025 and 2026. As a result, we anticipate a much stronger banking sector capable of playing a larger role in economic development, which again should attract positive attention to the equities market,” he said.
