Leading Nigerian banks are making significant moves to raise N1.26 trillion in compliance with the Central Bank of Nigeria’s (CBN) new recapitalization requirements. The CBN announced in March 2024 that the minimum capital base for banks operating in Nigeria would be increased, and banks have until March 31, 2026, to meet these requirements.
Zenith Bank, Access Holdings, Fidelity Bank, GTCO, and FCMB Group are spearheading this effort, launching rights issues and public offers to raise the necessary funds.
Zenith Bank is set to initiate a N188.4 billion rights issue, offering 5.23 billion shares at N36 each, pre-allocated to existing shareholders at a ratio of one new share for every six held as of July 24.
FCMB Group has also entered the capital market with a public offer of 15.197 billion ordinary shares at N7.50 per share, aiming to raise N113.98 billion.
Access Holdings plans to generate N351 billion from existing shareholders, offering approximately 17.773 billion shares at N19.75 per share, with the rights pre-allocated at one new share for every two shares held as of June 7. This offer is set to close on August 14.
Guaranty Trust Holding Company (GTCO) is targeting N400.5 billion through a public offer of 9.0 billion shares at N44.50 per share, which will close on August 12.
Fidelity Bank, after receiving shareholder approval, has increased its capital raising target from N127.1 billion to N205.45 billion. The bank is issuing an additional 8.2 billion shares to accommodate potential oversubscriptions of its ongoing rights and public offers. Initially, Fidelity Bank launched a hybrid offer consisting of a rights issue of 3.2 billion shares at N9.25 per share and a public offer of 10 billion shares at N9.75 per share.
This recapitalization drive comes in response to the CBN’s revised definition of minimum capital, which now considers the sum of share capital and share premium rather than total shareholders’ funds. This change necessitates that nearly all banks raise additional funds to maintain their banking licenses.
The CBN’s mandate is designed to strengthen the financial stability of banks amid economic challenges. Analysts and financial experts have expressed support for this move, highlighting its potential to reinforce the country’s financial system and bolster the stock market.
As Nigerian banks race to meet these new capital requirements, the industry is poised for significant changes, ensuring greater resilience and stability in the financial sector.
