Fresh Capital: Five Banks Project N575.62bn for Loans to SME, Others
Kayode Tokede
About five of the banks that are in the capital market to raise fresh capital have pledged to allocate N575.62 billion from the N1.12 trillion net proceeds for loan to corporate, Small and Midsize Enterprise (SME) and retail banking sectors.
The banks are: Access Holdings Plc, Fidelity Bank Plc, Guaranty Trust Holding Plc (GTCO), FCMB Group Plc, and Zenith Bank Plc.
This was indicated in the offer prospectus of five lenders that have commenced their capital raise, to meet the new capital requirement of the Central Bank of Nigeria (CBN).
In late March, the CBN announced new capital requirements for the banks operating in the country.
The apex bank directed commercial banks with international authorisation to increase their capital base to N500billion, national banks to N200billion and those with regional authorisation were expected to achieve a N50billion capital floor.
An analysis of the offering documents showed that Access Holdings had budgeted the highest amount for its local and international business expansion.
Access Holdings indicated that 65 per cent or N223.01 billion of the N343.09billion net proceeds from its rights offer would be invested business expansion.
According to the Pan-African bank, about N154.39 billion or 45 per cent of the proceeds would go into lending to corporate and commercial business segment; N51.46 billion or 15 per cent to retail business segment and N17.15 billion or five per cent of the proceeds goes into lending to SME customers.
On its part, GTCO said N133 billion of the net proceeds of N400 billion will go into lending to corporate, commercial, retail and SME segments.
Of its net proceeds of N392.49billion, the holding company said N138.5 billion would go into branch network expansion and refurbishment and N98.5 billion on technology/ infrastructure upgrades.
Zenith Bank said out of net proceed of its N185.14 billion offer, N83.3 billion would go into working capital to support expanding operations out of which it budgeted N68.5billion on loans to corporate, SMEs & retail.
Zenith Bank is offering 5,232,748,964 new Ordinary Shares by way of a Rights Issue at N36.00 per Share and based on a ratio of one Ordinary Share for every 6 Ordinary Shares held by Existing Shareholders as at the Qualification Date.
Fidelity Bank, another bank that has closed its offering, said it plans to invest about N66.53billion out of the N95.05billion proceeds on business and regional expansion. This is the lowest amount, among the five banks lending in the real sector.
Out of the N66.53billion, Fidelity Bank, said it is lending N9.5billion to retail business segment; N14.3billion to SME segment; N40.4 billion to the corporate & commercial segment and N2.38billion goes to investment in regional expansion.
Of the five banks reviewed, FCMB Group has the second least amount budgeted for loans to corporate, SME & retail at N84.57billion (78.22 per cent of the N108.11 billion net proceeds).
According to the Group, about N38.98 billion goes into lending to the wholesale banking segment; N35.32 billion into lending to retail & SME segments and N10.27 billion to agricultural and non-oil export.
