In an effort to meet the Central Bank of Nigeria’s (CBN) recapitalization deadline, five banks are collectively investing nearly N23 billion to raise a total of N1 trillion for their recapitalization initiatives, according to information obtained by LEADERSHIP.
The banks involved—Guaranty Trust Holding Company (GTCO) Plc, Zenith Bank, Access Holdings, Fidelity Bank, and FCMB Group—are spending a combined N22.939 billion on various capital-raising activities. These expenses include fees, costs, and other expenditures related to executing offerings, covering underwriting, legal, accounting, escrow, and compliance costs.
On March 28, 2024, the CBN revised the minimum capital requirements for all commercial banks, merchant banks, and non-interest banks in Nigeria. The new regulations require banks to meet the updated capital requirements within 24 months, starting from April 1, 2024, and ending on March 31, 2026. Banks can comply by raising additional capital, pursuing mergers and acquisitions, or changing their licensing.
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This increase in the minimum capital requirements is part of the CBN’s strategy to enhance banks’ capacity to navigate current macroeconomic challenges and withstand external and domestic shocks, while continuing to support the growth of the Nigerian economy.
According to the offer prospectus, GTCO plans to raise N400.5 billion through a public offer, with N8.010 billion allocated for offering expenses, representing 2% of the gross proceeds. Zenith Bank will incur N1.739 billion in offering costs, which is 1.72% of the gross proceeds of N101.005 billion, leaving the bank with estimated net proceeds of N99.266 billion. Access Holdings has projected offering costs of N7.918 billion, resulting in estimated net proceeds of N343.091 billion.
Fidelity Bank anticipates net offer proceeds of N95.049 billion after deducting offering costs of N2.450 billion, which represents 2.51% of the offer. FCMB Group expects net offer proceeds of N108.118 billion after deducting estimated offering costs of N2.822 billion, representing 2.54% of the gross proceeds.
Aigboje Aig-Imoukhuede, chairman of Access Holdings, emphasized that “the proceeds from the issue will be used to enhance Access Bank’s capital adequacy, in compliance with regulatory capital requirements, thereby strengthening the bank’s resilience against systemic shocks and fortifying its balance sheet. This will enable the bank and its subsidiaries to meet growth objectives in line with the Group’s medium-term strategy.”
Dr. Adaora Umeoji, group managing director and CEO of Zenith Bank, stated that “the capital raised will be directed towards expanding banking operations across Africa and internationally, investing in technology infrastructure, and supporting ongoing working capital needs.”
Oladele Sotubo, CEO of Stanbic IBTC Capital Limited (the lead issuing house for Zenith Bank’s offer), praised Zenith Bank’s management for its dedication to the transaction. He noted that the offering provides an opportunity for existing shareholders to consolidate their positions, while also inviting new investors to participate in Zenith Bank’s future growth. He also acknowledged Stanbic IBTC Capital Limited’s role in leading and executing the transaction, highlighting that “a combined offer, including both a rights issue and a public offer, reaffirms Zenith Bank’s position as a trailblazer in the industry and a model that will likely inspire more transactions in the capital market.”
Ladi Jadesimi, chairman of FCMB Group, stated that the funds raised will be used to recapitalize FCMB Limited, in line with the bank’s new minimum capital requirements.
