The stock market segment of the NGX is currently witnessing an increase in activities as listed commercial banks give investors opportunity to own a slice of the pie and for some to increase their stake.
The directive which was contained in a CBN circular emphasised that all commercial banks were required to meet the minimum capital requirement within 24 months commencing from April 1, 2024.
Capital market analysts stressed that competition for investors’ interest would be keen as commercial banks would require about N4.7 trillion to meet the recapitalisation benchmark set by the central bank.
Fidelity Bank Plc. has commenced its Public Offer of 10,000,000,000 ordinary shares of 50 kobo each at N9.75 per share and Rights Issue of 3,200,000,000 ordinary shares of 50 kobo each at N9.25 per share.
Wema Bank Plc. set the pace as it successfully completed the first tranche of its recapitalisation exercise having secured all relevant regulatory approvals for the allotment of its N40 billion Rights Issue which was initiated in December 2023.
Guaranty Trust Holdings Company Plc. (GTCO) this month said the management has proposed offering for subscription of ordinary shares of 50 kobo each in its share capital (the Ordinary Shares) to raise gross proceeds of up to N500 billion.
The likes of FBN Holdings, FCMB Group have announced plans to raise N300 billion and N150 billion capital respectively as Access Holdings got shareholders’ approval to raise $1.5 billion.
“The truth is that most banks may not be able to raise as much as they require from the stock market at this time because of high interest rate, among other factors. Ordinarily, banks could have raised as much as they required at a lower cost of equity and as it is now, they may have to consider a higher cost of equity.
Speaking from shareholders’ perspective, the National coordinator, Progressive Shareholders Association of Nigeria (PSAN), Mr. Boniface Okezie in a chat with THISDAY, welcomed commercial banks’ decision to access the Nigerian capital market to raise capital following the CBN’s directives.
“The banking sector recapitalisation during Prof. Charles Soludo as CBN governor reformed the sector and it could have been difficult for our banks to expand beyond Africa, Europe and Asia if not for that exercise. The sector recapitalisation serves as a buffer and aid banks to support the real sector of the economy.”
The Chairperson of the Pragmatic Shareholders Association, Mrs. Bisi Bakare, said shareholders over the years had been waiting for banking sector recapitalisation, noting that it was coming at the time banks needed to be equipped to grant more loans to support Federal Government’s $1 trillion economy drive
“Banks accessing the stock market to raise fresh capital is a welcome development. However, we (shareholders) just hope the price of the offer is going to be friendly to existing shareholders.
“Of course, we are very happy Nigerian banks are accessing the capital market to raise funds for them to meet the new recapitalisation requirement of CBN,” he added.
Speaking from a different perspective, the former National Co-ordinator, Independent Shareholders Association of Nigeria (ISAN), Dr. Anthony Omojola, commended moves by banks to raise capital from the stock market, emphasising on the timing and prices.
“Standard of living and purchasing power are severe and we are thinking the FG will slow down inflation rate and improve the foreign exchange for shareholders to partake in these offers by Nigeria banks.
Meanwhile, the framework released by SEC outlines guidelines and procedures banks are required to follow to raise capital through rights issuance, private placements, or other approved methods during the ecapitalisation period.
“Capital market has a significant role to play in facilitating the recapitalisation programme as the Banks are expected to leverage the market to raise the needed funds and /or engage in various forms of business combinations.
As the regulatory institution mandated to regulate and develop the Nigerian capital market, the Securities and Exchange Commission (SEC), has the responsibility to ensure a smooth, transparent, and efficient capital raise process by the banks.
“This framework outlines the guidelines and procedures banks are required to follow to raise capital through rights issuance, private placements, or other approved methods during the 2024-2026 recapitalisation period.”
It further stated that applications/documents are to be filed electronically via [email protected] email. In addition, it pointed out that documents forwarded would be reviewed, “and where there are observed deficiencies, this will be communicated to the applicants electronically.”
In the meantime, the stock market section of the NGX depreciated by N103 billion in three-day trading activities this week due to profit-taking in MTN Nigeria Communications Plc. Transcorp Hotel Plc. among others
Specifically, the overall market capitalisation closed trading at N56.424 trillion yesterday, representing a decline of N103 billion or 0.18per cent from N56.527 trillion the overall market capitalisation opened for trading. . Despite the shortened trading week, the activity level improved with trading volume and value increasing by 25.3per cent and 21.8per cent week-on-week respectively.