Nigerian Banks Unveil Recapitalisation Plans, Others Silent as April 30 Deadline Expires

Nume Ekeghe

As the April 30, 2024 deadline for banks to submit their recapitalisation strategies to the Central Bank of Nigeria (CBN) expires, financial institutions are now navigating the path to meet the revised capital requirements.

The CBN, in March, heightened the capital threshold for banks, granting them a two-year grace period to comply or explore alternatives such as mergers, acquisitions, or license downgrades.

The revised criteria mandate commercial banks with international licenses to maintain a capital base of N500 billion, while national and regional counterparts are required to hold N200 billion and N50 billion, respectively.

Additionally, the capital bases for national and regional non-interest banks have been raised to N20 billion and N10 billion, respectively, along with a N50 billion requirement for merchant banks.

Despite the compliance deadline set for 2026, banks were mandated to submit detailed plans outlining their steps, transactions, and instruments for recapitalisation by April 30. While some institutions have proactively sought shareholder approval and unveiled concrete strategies, others have maintained silence.

For instance, Access Holdings, the parent company of Access Bank, received shareholder approval for a N365 billion rights issue, signalling a clear path toward additional capitalisation.

Similarly, GTCO disclosed plans to seek shareholders’ consent for a $750 million capital raise, utilising various securities issuance options.

United Bank for Africa (UBA) is considering a blend of capital-raising methods, including rights issues or private placements, to meet regulatory requirements.

 Its Group Managing Director and Chief Executive Officer, Oliver Alawuba, had mentioned: “The capital raising strategy may include a combination of options such as Rights Issue or Private Placement. The fact remains that we are confident in our ability to meet the CBN’s capital adequacy requirements and will keep investors informed as we progress.”

Also, FCMB Group Plc has greenlighted a roadmap to bolster its commercial banking subsidiary, FCMB Limited, to comply with the N200 billion minimum capital base.

Stanbic IBTC Holdings Plc has launched a robust N550 billion capital raise initiative, encompassing a N150 billion rights issue and a N400 billion debt capital raise.

Zenith Bank, despite requiring the least capital among its peers, obtained shareholder approval for a multifaceted restructuring, positioning itself to potentially reach a nearly N1 trillion capitalisation.

Fidelity Bank has also unveiled plans to raise between N120 billion and N150 billion through public offerings and rights issues by June, with additional capitalization measures planned thereafter.

In light of these developments, industry analysts predict increased merger and acquisition activity, particularly among smaller banks struggling to meet the new capital requirements.

 As the banking landscape analysts also anticipate a shift in the operations of merchant banks towards regional commercial banking as well as some reclassification of banks from national to regional banks.