How Access Bank Overtook Others, Becomes First to Scale CBN’s N500bn Recapitalisation Hurdle

•Aig-Imoukhuede: Achievement demonstrates resilience of capital market  

•Nigeria’s stock market beats analysts’ forecast, gains N21.03trn in 2024

James Emejo in Abuja and Kayode Tokede in Lagos

There are indications that Access Bank Plc has become the first Deposit Money Bank (DMB) to scale Central Bank of Nigeria’s new minimum capital requirement of N500 billion for commercial banks with international authorisation. This followed the announcement by Access Holdings Plc that the company had secured full regulatory approvals of the apex bank and the Securities and Exchange Commission (SEC) of its recently closed Right Issue, raising a total of N351.01 billion, which was its target amount.

In a statement, the Company Secretary, Sunday Ekwochi, said the success from the capital mobilisation had positioned the company’s flagship subsidiary, Access Bank, as the first bank to meet the CBN’s minimum capital threshold, well ahead of the March 31, 2026 regulatory deadline.

That was as the Nigerian equities market surpassed analysts’ expectation, gaining N21.03 trillion in 2024 amid an unstable foreign exchange market, soaring inflation rate, among other macroeconomic challenges.

The gain in market capitalisation between January and December 24, 2024 came against the backdrop of a 34.60 per cent inflation rate as of November 2024, and the naira trading at N1,537/$ on the last day of trading before Christmas.

With the capital raise success, Access Bank’s share capital would increase to N600 billion, N100 billion above the regulatory minimum requirement.

Reacting to the feat, Chairman, Access Holdings, Mr. Aigboje Aig-Imoukhuede, said, “We are pleased that this time we are the first to breast the tape.”

Aig-Imoukhuede added that the Access brand had always resonated strongly with the local and international capital markets.

According to him, “The success of the Rights Issue demonstrates the resilience of Nigeria’s capital market and reinforces our shareholders’ confidence in the present value and potential of our company.”

He pointed out that since 2004, the bank had raised billions of dollars in capital to meet successive CBN recapitalisation directives.

Aig-Imoukhuede said the success of the rights issue further demonstrated the resilience of the country’s capital market and “reinforces our shareholders’ confidence in the present value and potential of our company”.

He said, “We deeply acknowledge the invaluable and strong support of the Central Bank of Nigeria and the Securities and Exchange Commission who both played crucial roles in ensuring the integrity and efficacy of our rights issue exercise.

“We are also grateful to our valued shareholders, whose loyalty to the Access brand and vision for over 22 years has been most inspiring and unwavering.

“As we enter into the new year, we are well-positioned to leverage our enhanced capital base to deliver sustainable value for our stakeholders.”

Access Holdings remains the first CBN licensed and regulated financial holding company to successfully execute a fully digital rights issue, embracing the power of technology to improve access to equity capital market – in further testament to its commitment to innovation leadership.

The company secured the full regulatory approvals from both the central bank and SEC of its recently closed Right Issue of 17.77 billion ordinary shares of 50 kobo each at N19.75 Kobo per share.

The offer was extended to shareholders who held shares as of June 7, allowing them to purchase one new share for every two shares owned.

The company received an overwhelming 24,181 applications, amounting to 18.82 billion shares valued at about ₦371.77 billion—reflecting an oversubscription rate of 105.76 per cent.

The development was a significant achievement for Access Bank, further reinforcing its place as a leading financial institution in the country.

By leveraging the NGX’s E-offer platform, the company provided its shareholders with a seamless, efficient, and convenient subscriber experience significantly reducing barriers and democratising participation in the rights issue.

The CBN had on March 28 announced new minimum capital requirements of N500 billion and N200 billion for commercial banks with international and national authorisation, respectively.

The apex bank further unveiled new capital base of N50 billion for banks with regional licenses, and also pegged the new minimum capital for merchant banks at N50 billion, while non-interest banks with national and regional authorisations are mandated to raise their capital thresholds to N20 billion and N10 billion, respectively.

CBN Governor, Mr. Olayemi Cardoso, in his address to the Annual Bankers’ Dinner in November 2023, pointed out that the recapitalisation programme aimed to enhance banks’ resilience, solvency, and capacity to continue supporting the growth of the Nigerian economy, particularly achieving President Bola Tinubu’s aspiration for a $1 trillion economy.

Meanwhile, THISDAY’s analysis of trading numbers showed that the Nigeria Exchange Limited (NGX) market capitalisation closed December 24, 2024 at N61.944 trillion, representing about N21.03 trillion or 51.4 per cent gain in investors net returns in 2024 from N40.918 trillion the stock market opened for trading this year.

Specifically, the listings of Aradel Holdings Plc, Transcorp Power Plc, and surge in Dangote Cement Plc stock price, among other blue-chip stocks, contributed to the market capitalisation increasing to that value in the period under review.

Similarly, the Federal Government of Nigeria foreign exchange policies impacted on foreign investors’ increasing participation in the stock market, despite increasing the Monetary Policy Rate, from 18.75 per cent in 2023 to 27.5 per cent in 2024.

The NGX All-Share Index also closed December 24 at 102,186.03 basis points, about 36.66 per cent Year-till-Date (YtD) gain as of December 24, 2024 from 74,773.77 basis points the stock market closed for trading in 2023.

The reported 36.66 per cent YtD gain in NGX ASI means the Nigerian stock market still maintains its position among the top four best performing exchanges in Africa. 

Sectoral performance closely aligned with broader market sentiment, with all major NGX indices closing in the positive territory as of December 24, 2024 — Oil & Gas (+160.36per cent), Insurance (+102.96per cent), Consumer Goods (+51.97 per cent), Industrial Goods (+31.45 per cent, and Banking (+23.23 per cent) indices.

As in previous years, the NGX Oil and Gas index remained the top-performing index in the market, propelled by favourable industry policy interventions. Key developments in the period include the approval of the $1.28 billion Seplat-Mobil divestment transaction after two years of delay and Oando’s acquisition of Nigerian Agip Oil Company (Agip).

Also, the Consumer Goods sector showed resilience, advancing, despite challenges from currency depreciation, cost pressures, and high interest rates that impacted the earnings of industry players.

Capital market analysts stated that the stock market performance in 2024 was on the backdrop of mixed corporate earnings by listed companies, the federal government’s reforms in the foreign exchange market, and fuel subsidy removal.

Analysts at Cordros Research, in a report titled, “Nigeria in 2025, Reform to Recovery: Navigating the Rebound,” stated that the financial market in 2024 had been a story of “two unequal halves.”

They said in the first half, the domestic equities market surpassed previous highs, hitting the 100,000- point mark for the first time, as elation about reforms remained rife among investors.

The report stated, “In the second half, fixed income yields hit unprecedented levels, moving in tandem with the Monetary Policy Committee (MPC) aggressive stance and, thus, reinstating investors’ belief in the rate transmission mechanism.”

Responding to market performance in 2024, Vice President, Highcap Securities Limited, Mr. David Adnori, stated that investors were trading based on sentiment.

He stated that the emergence of President Bola Tinubu further energised the stock market since market participants had hope in his ability to rejig the economy and implement economy-friendly policies.

Adnori, however, said the stock maintained its positive momentum in H2 2024 on the backdrop of banking sector recapitalisation and 2024 corporate earnings by most, especially, banks listed on the exchange.

Amid a hike in the Monetary Policy Rate (MPR) to 27.5 per cent, capital market experts stated that its impact had created sentiment trading among investors, who saw the fixed-income market as an alternative investment opportunity to hedge against double-digit inflation.

An investment banker and stockbroker, Mr. Tajudeen Olayinka, stated that the N21.03 trillion market capitalisation gain in 2024 told of the presence of huge liquid funds in the hands of institutional investors, who currently dominated activities in the stock market.

Olayinka said, “It also indicates the fact that the future is brighter for some of the listed companies, hence, investors are positioning their portfolios for that brighter future. This is also the reason the market remains resilient in spite of the high interest rate regime.”

On the market performance in 2025, the analysts at Cordros Research said, “We expect a bullish start to 2025E, driven by investors positioning for 2024FY results and dividend declarations, particularly in the banking sector.

“Ultimately, certain factors primarily will determine how the market shapes up in 2025. The primary factors include the trajectory of economic growth, direction of monetary policy and impact on fixed income yields, and corporate earnings performances.

“In 2025E, we project the Nigerian economy to record modest growth of 3.87 per cent (Cordros estimate), driven by incremental oil production from new fields and improved security conditions.

“Non-oil sectors, notably telecommunications and financial services, are expected to underpin Gross Domestic Product (GDP) growth, with telecoms expected to recover from recent setbacks and financial services extending their 2024 performance.”

The report added, “While these dynamics may provide a foundation for revenue growth and profitability, they are insufficient to offset significant macroeconomic headwinds.

“Persisting currency pressure remains the most critical challenge, exacerbating operational inefficiencies and inflating costs for corporates, particularly companies in the manufacturing sector, which are more reliant on imported inputs as well as foreign currency-denominated obligations.”

The report said that dynamic threatened to erode margins, especially as companies grappled with a constrained consumer environment marked by weakened purchasing power and rising inflation.

According to the Cordros research, “Consequently, we anticipate considerable strain on corporate earnings across most non-financial sectors. However, we expect the banking sector to emerge as a relative outperformer given strong capital buffer, an elevated yield environment that spurs net interest income, and historical resilience in volatile macroeconomic conditions.

“Conversely, consumer goods, utilities, and oil and gas sectors may struggle to navigate the compounded pressures of currency volatility, rising costs, and constrained consumer spending.”