First Bank Holdings Set to Raise ₦300bn Capital in Line with CBN’s Banking Reforms

First Bank Holdings has arranged to raise additional capital of ₦300 billion ($231 million) at a shareholders meeting scheduled later this month. This is due to the Central Bank of Nigeria’s plans for a recapitalization drive.

First Bank Holdings on Monday revealed in a statement that the capital raise will be issued via a public offering, private placement, or rights issue in the Nigerian or international capital markets or a combination of the listed methods.

First Bank Holdings to Honour CBN Recapitalization Policy

CBN 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.

According to the acting CBN director, commercial banks with national licenses, like First Bank Holdings, must meet an N200bn threshold, while those with regional authorization are expected to achieve an N50bn capital floor.

Similarly, non-interest banks with national and regional authorizations will need to increase their capital base to N20bn and N10bn, respectively.

CBN Stipulated Guidelines For First Bank Holdings and Others

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

(a) 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.

(b) Additional Tier 1 capital shall not be eligible for meeting the new requirement.

(c) All banks are required to meet the minimum capital requirement within 24 months commencing from April 1, 2024, and terminating on March 31, 2026.

(d) Notwithstanding the capital increase, banks are to ensure strict compliance with the minimum capital adequacy ratio requirement applicable to their license authorization.

(e) In line with extant regulations, banks that breach the CAR requirement shall be required to inject fresh capital to regularise their position.

Conclusion

Commercial banks, such as First Bank Holdings, with international spread, will increase their capital by as much as ₦500 billion to be licensed to operate in the country. While national and regional banks will raise ₦200 billion, respectively.

Also, Access Holdings, the parent company of one of Nigeria’s biggest banks, has planned to raise as much as ₦365 billion ($257 million) by selling shares to existing investors. apex bank.

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