Recapitalisation: As Zenith Bank’s Adaora Umeoji Leads the Charge

The Adaora Umeoji-led Zenith Bank Plc is assiduously working towards complying with the Central Bank of Nigeria’s directive to banks to recapitalise with a compliance deadline of March 31, 2026, writes Louis Achi

On March 28, 2024, the Central Bank of Nigeria (CBN), leaning on its statutory powers, boldly tweaked its regulatory playbook. It handed down a directive to Nigeria’s deposit money banks (DMBs) to recapitalise, with a compliance deadline of March 31, 2026.

The CBN’s move approximates a ten-fold increase in minimum capital requirements for banks. The last such banking consolidation occurred nearly two decades ago under ex-CBN governor, Prof. Chukwuma Soludo. According to the CBN Governor, Olayemi Cardoso, the apex bank targets a strong banking sector capable of supporting govt’s $1tr GDP by 2030

There were 35 DMBs in Nigeria as at the end of the fourth quarter of 2022, comprising 26 Commercial Banks (including two Non-Interest Banking Windows), six merchant banks and three Non-Interest Banks (NIBs).

In a direct, preemptory memo, the apex financial services sector regulator seized the bull by the horns and revised the capitalisation requirements. It set new benchmarks for banks with international operations at N500 billion; those with national licences – N200 billion, and licenced regional players – N50 billion.

This directive, a crucial step towards birthing a stronger banking sector and consequentially a more vibrant national economic backbone, set the stage for strategic responses by the serious sector players to dig deep and step forward.

Although this crucial, high-impact regulatory intervention came during a leadership transition phase in the corporate trajectory of Zenith Bank Plc, Africa’s sixth largest bank and Nigeria’s leading financial institution, the behemoth is spearheading the charge in compliance with CBN’s directive.

Zenith Bank Plc emerged as the Best Bank in Nigeria in the Global Finance Best Banks Awards 2024, winning the award for an unprecedented fourth time since 2019. The recognition emphatically reaffirms Zenith Bank’s position as a trailblazer in sustainable banking practices, setting a benchmark for excellence within the Nigerian banking industry and beyond. The Bank has been a leader in monitoring and reporting sustainability impact.

Zenith Bank Plc recently announced the appointment of Dr. Adaora Umeoji, as its Group Managing Director/Chief Executive with effect from June 1, 2024. She took over from Dr. Ebenezer Onyeagwu, whose transformative five-year term expired on May 31, 2024. An Amazon with compelling verve and matching professional credentials and capacity, Umeoji has set the ball rolling.

Weeks after the whistle for the commencement of banks’ recapitalisation was blown by the CBN, the attention of stakeholders in these institutions has for obvious reasons returned to the boardrooms for strategic planning. This is the forte of Zenith Bank-led Umeoji.

Umeoji covets knowledge-driven innovations, proactive engagement with stake-holders, policy makers and sure-footed action. She brings these dimensions to her leadership of Zenith Bank Plc, one of the continent’s most transformed financial services behemoths.

Going by available data, commercial banks in the country would require a combined N3.894 trillion to meet the new baseline capital requirements. This will necessitate capital raising efforts from both domestic and international markets.

In consonance with CBN’s directive, Zenith Bank Plc seeks to create 31.3 billion new shares, aiming to raise additional capital. The bank proposes amending its articles of association to reflect the new share capital of N31.3 billion. This would bring the total issued shares to 62.7 billion, with each share valued at 50 kobo.

“Clause 6 of the Company’s Memorandum of Association and Clause 9 of the Company’s Articles of Association are hereby amended to reflect the new share capital of N31.3 billion by the creation of the addition of up to 31.3 billion ordinary shares of N0.50 Kobo each ranking pari-passu with the existing ordinary shares of the company bringing the total issued shares of the Company to 62.7 billion, ordinary shares of N0.50 Kobo each,” the bank said.

The bank will establish a capital raising programme in the Nigerian or international capital market of up to the authorised capital of the company, through the issuance of ordinary shares, or preference shares, whether by way of a public offering, private placement, rights issue or both, or any other method or combination of methods, in such tranches, series or proportions and at such dates, and conditions as may be determined by the board subject to obtaining the requisite regulatory approvals.

Further according to the Bank’s Company Secretary, “In the event of a Rights Issue, any shares not taken up by existing shareholders within the period stipulated under the Rights issue may be offered for sale to other interested shareholders of the Bank on such terms and conditions as may be determined by the Directors subject to the approvals of the relevant regulatory authorities.”

The plan was detailed in a notice ahead of its third Annual General Meeting held on May 8. Zenith Bank Plc can lean on several strengths it has established and finely honed over the years to lead its sector rivals in the recapitalization push and compel subscription to Zenith Bank’s offer as the May 8 AGM has already kick started its capital raising effort in line with CBN’s directive which the Bank sees as a significant opportunity for an even stronger and more resilient banking industry.

These include: its strong corporate governance culture, unmatched stability in management, strong growth records, attractive returns on investment, attractive offer terms and more.

Another important factor in Zenith Bank’s recapitalisation drive is its undisputed ability to raise the stipulated capital because amongst its peers in the industry, it is expected to raise the least amount due to its already robust capital base.

Zenith Bank’s new share capital of N31.3 billion via the creation of the addition of up to 31.3 billion ordinary shares of N0.50 Kobo aiming to raise additional capital each have received rousing support from the investing public as key capital market stakeholders recalled the symbolic importance of Zenith Bank’s impressive growth and investor-friendly disposition over the years.

As the bank which has the highest corporate governance rating and an average annual capital gain of more than 100 per cent at the stock market, Zenith Bank has strong appeal to the investing public.

Zenith Bank Plc places premium on its core business strategy which is anchored on People, Technology and Service to create value for its clientele. With strict adherence to global best practices, the bank combines market knowledge, professionalism, expertise and ICT to create products and provide services that anticipate and meet customers’ dynamic needs.

As the recapitalisation drive gets into full gear, industry analysts and key sector stakeholders cannot easily forget that Zenith Bank has won numerous local and international awards for a reason.

It was named Best Bank in Nigeria for the fourth time in five years from 2020 to 2022 and in 2024 by the Global Finance World’s Best Banks Awards; Best Bank for Digital Solutions in Nigeria by the Euromoney Awards 2023; being listed in the World Finance Top 100 Global Companies in 2023; and being recognised as the Number One Bank in Nigeria by Tier-1 Capital for the 14th consecutive year in the 2023 Top 1000 World Banks Ranking published by The Banker Magazine.

Zenith Bank has also been honoured as Best Commercial Bank in Nigeria for three consecutive years from 2021 to 2023 by the World Finance Banking Awards; Best Corporate Governance Bank in Nigeria by the World Finance Corporate Governance Awards 2022 and 2023; Bank of the Year (Nigeria) by The Banker’s Bank of the Year Awards in 2020 and 2022; and Best in Corporate Governance Financial Services Africa for four successive years from 2020 to 2023 by Ethical Boardroom.

Other recognitions include Most Sustainable Bank in Nigeria at the International Banker 2023 Banking Awards, Best Commercial Bank in Nigeria, and Best Innovation in Retail Banking in Nigeria at the International Banker 2022 Banking Awards.

With Dame Adaora Umeoji at the helms, many believe the recapitalization project is already a walk-over; a stroll in the park for Zenith Bank – and understandably so.