Recapitalisation: 5 Banks Expend N23bn To Raise N1trn

In a bid to meet the Central Bank of Nigeria’s (CBN) recapitalisation exercise deadline, five banks are investing approximately N23 billion to raise N1 trillion for their respective recapitalisation efforts, LEADERSHIP has learnt.

Guaranty Trust Holding Company (GTCO) Plc, Zenith Bank, Access Holdings, Fidelity Bank, and FCMB Group are spending N22.939 billion on various capital-raising activities.

Offering expenses include fees, costs, and expenses related to executing an offering of interests in one or more series, encompassing underwriting, legal, accounting, escrow, and compliance costs.

On March 28, 2024, the CBN announced a revision of the minimum capital requirements for all commercial banks, merchant banks, and non-interest banks in Nigeria. The circular stated that banks are required to meet the new minimum capital requirement within 24 months, starting from April 1, 2024, and ending on March 31, 2026. They can achieve this through raising additional capital, mergers and acquisitions, or changes in licensing.

The increase in the minimum capital of banks is part of the CBN’s efforts to strengthen their capacity to navigate prevailing macroeconomic challenges and external and domestic shocks, while continuing to support the growth of the Nigerian economy.

According to the offer prospectus, GTCO plans to raise N400.5 billion via a public offer and will spend N8.010 billion on offer costs and expenses, representing 2.0 per cent of the gross proceeds.

Zenith Bank will incur offer costs of N1.739 billion, representing 1.72 per cent of the gross proceeds of N101.005 billion, leaving the bank with estimated net proceeds of N99.266 billion. Access Holdings has projected offer costs of N7.918 billion, resulting in estimated net proceeds of N343.091 billion.

Fidelity Bank expects net offer proceeds of N95.049 billion after deducting offer costs of N2.450 billion, representing 2.51 per cent of the offer. FCMB Group’s estimated net offer proceeds are N108.118 billion, following the deduction of estimated offer costs of N2.822 billion, representing 2.54 per cent of gross proceeds.

The chairman of Access Holdings, Aigboje Aig-Imoukhuede, stated that “the proceeds from the issue will be used to enhance Access Bank’s capital adequacy, in compliance with regulatory capital requirements, thereby deepening the bank’s ability to withstand systemic shocks and strengthen the bank’s fortress balance sheet.

This will allow it to meet its and other banking subsidiaries’ growth needs in line with the Group’s medium-term strategic objectives.”

The group managing director/chief executive officer of Zenith Bank, Dr Adaora Umeoji, said, “The proceeds from the capital raise will be channelled towards expanding banking operations across Africa and internationally, investing in technology infrastructure, and supporting working capital on an ongoing basis.”

The chief executive of Stanbic IBTC Capital Limited (the lead issuing house for Zenith Bank’s offer), Oladele Sotubo, commended Zenith Bank’s management for its commitment to the transaction. He noted that it provides an opportunity for existing shareholders to consolidate their positions and welcomes new investors to join the journey towards Zenith Bank’s future.

He also expressed gratitude for Stanbic IBTC Capital Limited’s role in leading and guiding the execution of the transactions, stating, “A combined offer that includes both a rights issue and a public offer confirms Zenith Bank’s position as a pacesetter and role model, which will undoubtedly spur more transactions in the capital market.”

On the use of proceeds, the chairman of FCMB Group, Ladi Jadesimi, stated that the funds will be used to recapitalise FCMB Limited in line with the bank’s new minimum capital requirement.