Nigeria’s banking sector is experiencing a surge in capital raising, with five early-bird banks raising around ₦1.27 trillion. This indicates that investors remain optimistic about Nigeria’s banks’ stocks, even amidst the government’s windfall tax from banks’ 2023 foreign exchange gains.
Some of these banks recorded oversubscriptions. The bank capitalization initiative is a timely catalyst for economic growth because it requires banks to hold sufficient funds as a buffer against financial downturns.
Since the banking recapitalization exercise was announced on March 29, 2024, some banks have been to the equities market to raise capital. Five banks have concluded, and one is still ongoing.
The Central Bank of Nigeria (CBN) launched a recapitalization program in March, requiring commercial banks to raise fresh capital in line with the minimum requirement for their respective banking licenses.
The recapitalization is to be completed within 24 months, from April 1, 2024, to March 31, 2026.
Fidelity Bank received shareholders’ approval long before CBN announced the recapitalization exercise and was the first to enter the market with a combined rights issue and public offer. The offer ended on August 12 and surpassed its ₦127.1 billion target.
“With the conclusion of the Combined Offer, I am delighted to announce that we have met and surpassed the capital-raise target we set for ourselves in the first phase of our capital-raise exercise,” Nneka Onyeali-Ikpe, Fidelity Bank’s CEO, said.
FCMB Group was seeking to raise ₦110.9 billion through a public offering. According to insiders, GTCO Holdings has reportedly raised a staggering ₦1.26 trillion, far above the ₦400.5 billion it offered.
Zenith Bank ended its ₦290 billion combined offer about a month ago, and sources close to the bank say that it has raised its offered sum. Access Holdings was in the market with an ₦351 billion rights issue.
The equity market is up this year as most major listed banks have raised their capital, with the NGX Banking Index rising by 4.24%.
Analysts believe that recapitalization is a sound economic policy that enhances banks’ long-term sustainability by boosting their balance sheets and sustaining lending operations.
Comment, Like 👍, share this article, and Follow us on our social media handles.
WhatsApp Channel
Telegram Channel
