Specifically, the bank in a notice to the Nigerian Stock Exchange (NSE) signed by Oluwole Ajimisinmi, the company secretary and legal adviser, said the reduction in share capital follows the desire of the board to reward its loyal shareholders who have not received any dividend for several years. This, it said, was despite the bank’s return to profit four years ago owing to the backlog of negative retained earnings balance arising from losses and other impaired assets.
Despite the return to profit, it said the bank was precluded from offering dividend to shareholders, just as it restricts the ability and increases the cost of raising new capital.
The holistic capital reduction scheme, the statement assured, “would have no impact on the current holdings of shareholders, though the bank will be creating a capital reduction account to charge off the impaired assets while an equivalent amount will be moved from its share premium account to effectively close the entries.”
Should the shareholders approve the proposal, the bank will apply to the Federal High Court for approval of the scheme.
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