Recapitalisation: Access, GTCO, FBNH, UBA target $2.6bn fresh capital

As banks in Nigeria race to meet the recapitalization demands spelt out by the Central Bank of Nigeria, four of the tier-one banks in the country are targeting the sum of $2.6bn from both local and international capital markets via rights issues.

The tier-one banks are Access Holdings, Guaranty Trust Holding Company, United Bank for Africa Plc and FBN Holdings.

This development comes barely one month after the apex bank directed Deposit Money Banks to recapitalize in order to strengthen the Nigerian banking system, especially against the background of prevailing macroeconomic challenges.

Under the new arrangement, international banks whose current capital requirement is pegged at N50 billion are required to raise their capital base to N500 billion, national banks are expected to raise their capital base from the current N25 billion to N200 billion, merchant banks currently are expected to hold N50 billion.

CBN also gave the banks three ways to meet the new threshold. They include injection of fresh equity capital through private placements, rights issues and/or offers for subscription; Mergers and Acquisitions; and/or upgrade or downgrade of license authorisation.

To this effect, Ripples Nigeria understands that no fewer than four tier-one banks have submitted notices to the Nigerian Xchange (NGX) of plans to raise fresh capital through rights issues.

For instance, Access Holdings Plc, has announced plans to raise a staggering N365 billion through rights issue and is also seeking a combined capital raise of up to $1.5 billion via equity, quasi-equity and debt issuances.

READ ALSO:Access Bank set to acquire National Bank of Kenya

In a statutory notice filed with the NGX, Access Holdings said that it was looking at raising $1.5bn via a share sale or bond offering. The parent company of Access Bank, said it would also ask existing shareholders for permission to raise N365bn through a rights issue at its next Annual General Meeting scheduled to be held this month.

In the same vein, GTCO revealed that it would be seeking shareholders’ approval to raise $750m.

In a notice on the capital raising, GTCO said the fund would be raised “through the issuance of securities comprising ordinary shares, preference shares, convertible and/or non-convertible notes, bonds or any other instruments, in the Nigerian and/or international capital markets, either as a standalone issue(s) or by the establishment of capital raising programme(s), whether by way of public offerings, private placements, rights issues and/or other transaction modes, at price(s), coupon or interest rates determined through book building or any other acceptable valuation method or combination of methods, in such tranches, series or proportions, within such maturity periods and at such dates and upon such terms and conditions as may be determined by the board of directors of the Company (the Board), subject to obtaining the requisite approvals of the relevant regulatory authorities.”

The United Bank for Africa also revealed plans to raise about $200m fresh capital to meet the new regulatory benchmark.

In a statement issued late Sunday, the banking group said it is actively exploring a well-defined strategy to boost its capital base and ensure compliance within the regulatory time frame.

On its part, First Bank Holdings hopes to secure approval to raise additional capital of N300 billion ($231 million) at a shareholders meeting slated for later this month.

According to a statement by First Bank Holdings, the capital raise can be issued via a public offering, private placement or rights issue in the Nigerian or international capital markets or a combination of the listed methods.

In the coming days and weeks, more banks are poised to announce their intention to raise fresh capital as the race to meet the CBN’s deadline intensifies.

By:Babajide Okeowo

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