Access Holdings to Raise $1.8bn to Meet up with a New Capital Requirement by CBN

Access Bank, a subsidiary of Access Holdings, plans to raise $1.5 billion (₦2.09 trillion) through a bond or share sale.

Also, another $287 million (₦399.9 billion) from its shareholders via a rights issue to fund its ambitious growth plans so as to meet the new requirement set by the Central Bank of Nigeria.

Access Holdings Plans To Raise Capital To Meet With New CBN Requirements

CBN on Thursday announced new guidelines on its recapitalization policy for banks in the country. In a statement signed by its acting Director of Corporate Communications, Sidi Ali, the CBN directed commercial banks with international authorization to increase their capital base to ₦500bn and national banks to ₦200bn.

As stated by Bloomberg, Access Holdings will raise $1.5 billion as part of a five-year growth plan that began last year.

Access Holdings executives, during a conference call with investors in Lagos, said the lender will be looking to do this through the issue of shares, bonds, or other instruments.

The bank also plans to raise as much as ₦365 billion ($257 million) by selling shares to investors.

The CBN’s move came two days after the Monetary Policy Committee hinted that it would change the capital base of the banks.

Access Holdings Decision Based On New Recapitalization

Based on the CBN circular on recapitalization, only the share capital and premium capital of the shareholders’ fund portion of the balance sheet will be recognized.

The circular read: “For existing banks

The minimum capital specified above shall comprise paid-up capital and share premium only. For the avoidance of doubt, the new capital requirement shall NOT be based on shareholders’ funds.
Additional Tier 1 capital shall not be eligible to meet the new requirement.
All banks are required to meet the minimum capital requirement within 24 months, commencing on April 1, 2024, and terminating on March 31, 2026.
Notwithstanding the capital increase, banks are to ensure strict compliance with the minimum capital adequacy ratio requirement applicable to their license authorization.
In line with existing regulations, banks that breach the CAR requirement shall be required to inject fresh capital to regularise their position.”

Access Bank’s Shareholders To Authorize Fund Raising

Access Bank, a company under Access Holdings, which is Nigeria’s third-most popular bank with $190.6 million (₦251.8 billion), would raise an additional $187.8 million (₦248.1 billion) to meet the new requirements.

On Thursday, Access Holdings said that it will ask its shareholders to authorize the plans at an annual general meeting set for April 19.

Access’ wants to raise part of the funds by increasing its issued shares from ₦17.7 billion to ₦26.6 billion. The company has asked for regulatory authorization to raise capital of up to ₦365 billion by way of a rights issue on such terms and conditions and on such dates as may be determined by the directors.