AS Nigerian banks intensify efforts to comply with the Central Bank of Nigeria’s (CBN) new regulatory capital requirements, First City Monument Bank (FCMB) Group has announced plans to seek board approval for its recapitalization strategy. This development reflects FCMB’s commitment to aligning with the CBN’s directive to strengthen the capital base of financial institutions. Meanwhile, FBN Holdings’ rights issue, a crucial element of its recapitalization efforts, is set to close on December 12, 2024. The offer, which has garnered considerable attention, is expected to boost FBN Holdings’ financial position, enhance its capacity to provide larger credit facilities, and support operational expansion.
These initiatives are part of a broader restructuring within Nigeria’s financial sector aimed at ensuring resilience, sustainability, and alignment with global banking standards. Last week’s Proshare Bank Re-capitalization Watch noted the sector’s progress, highlighting that several banks remain active in the capital markets despite limited new updates. FCMB has announced plans to raise N340 billion, with a resolution to be tabled at its Annual General Meeting (AGM) on December 19, 2024.
Other banks have also been making strides. United Bank for Africa (UBA) is conducting a rights issue to raise N239.4 billion. The offering includes 6.84 billion ordinary shares priced at N35.00 each, available on a 1-for-5 basis for shareholders as of November 5, 2024. UBA has yet to announce a closing date for its offer. Similarly, FBN Holdings is raising capital through a rights issue of 5.98 billion ordinary shares at N25.00 per share, available on a 1-for-6 basis to shareholders as of October 18, 2024.
The banking industry’s recapitalization efforts have been commended by the Director-General of the Securities and Exchange Commission (SEC), who highlighted the N1.7 trillion raised so far as a significant step toward bolstering financial stability and enhancing investor confidence in Nigeria’s capital markets.
At the Bankers’ Night held over the weekend, CBN Governor Yemi Cardoso, reiterated the importance of the capital buffer policy introduced in 2023. This policy, which includes a two-year implementation timeline was designed to strengthen banks’ capacity to support Nigeria’s economic recovery.
“I am pleased to note that a significant number of banks have already raised the required capital through rights issues and public offerings, well ahead of the 2026 deadline, “the banking sector is now in a stronger position to support Nigeria’s economic recovery by enabling access to credit for MSMEs and driving investments in critical sectors of our economy,” Cardoso said.
The ongoing recapitalization efforts reflect a proactive approach by Nigerian banks to not only meet regulatory requirements but also position themselves as key drivers of economic growth. These measures are expected to create a more robust and competitive banking system capable of navigating contemporary challenges while fostering financial inclusion and sustainable development.
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