APPARENTLY due to pressure on regulatory capital adequacy ratio, three Nigerian lenders are seriously considering raising capital between this fourth quarter 2016 and early 2017.
Only recently, international rating agency, Fitch revised down the Support Rating Floors (SRFs) of 10 Nigerian banks to ‘No Floor’ and downgraded nine banks’ Support Ratings (SRs) to ‘5’ following a reassessment of potential sovereign support for the banking sector.
It was the agency’s view that some banks’ capital base are no longer commensurate with their risk profile, reflecting questions about asset quality, particularly their level of unreserved impaired loans to Fitch Core Capital (54 per cent at end-June 2016) and pressure on their regulatory capital adequacy ratio.
First City Monument Bank (FCMB) plans to raise N7.5 billion ($25 million) in Tier-II supplementary debt by year-end to strengthen its capital base, it said on Friday.
The bank had said in August it will raise between N10 to N15 billions of Tier II capital, targeting retail investors for the offering.
Similarly, Nigeria’s Union Bank plans to seek shareholder approval next month to raise N50 billion ($158.7 million) through a share sale to existing investors, the bank said on Tuesday.
In a notice to shareholders, the lender also said it will seek approval to increase its authorised share capital to N17.5 billion from N9.5 billion on December 7.
Also, there are strong indications that Skye Bank may sell some or all of its local and foreign subsidiaries as part of a review aimed at streamlining operations and boosting its capital adequacy, its chief financial officer said recently.
The Central Bank of Nigeria, CBN, shored up Skye Bank in July with a more than N100 billion capital injections, after sacking its top management for failing to meet minimum capital requirements. It then appointed a new management team.
The bank’s CFO, Mr Pius Olaoye was earlier quoted by Reuters as having said that the bank would sell subsidiaries if the pricing was right and has appointed advisers to help find buyers.
SkyeBank, which holds an international bank license, has three subsidiaries in West Africa and 10 non-bank subsidiaries.
“We are looking at the various outlets that we have and some of those foreign subsidiaries are part of it. If we get good offers we will consider selling them off,” Olaoye told Reuters in a phone interview.
“If we get good offers then we’ll go ahead and spin off all of them, if not it will be selective.” Olaoye said the sale of subsidiaries will boost the bank’s capital adequacy, which stood at 10.4 per cent last year, compared with an industry average of 16 per cent. He said the new management was focused on growing the bank’s retail business, cutting costs and improving asset quality.