Recapitalization: First Bank’s holding company to raise N300 billion

Nigeria’s FBN Holdings, parent company of the banking giant First Bank, is seeking shareholder approval to raise up to N300 billion.

The company plans to achieve this through a public share offering, private placement, or rights issue, as decided at an upcoming shareholder meeting on April 30.

• • Public share offering (IPO): Selling new shares to the general public.
  • Private placement: Selling new shares directly to a small group of institutional investors.
  • Rights issue: Existing shareholders get the right to buy new shares at a discount before they are offered to the public.

This capital raise comes after the Central Bank of Nigeria directed banks to raise their capital base to strengthen the nation’s banking sector and allow banks to play a more role in driving economic growth.

FBN Holding’s move follows a similar announcement by rival Access Holdings, which seeks to raise N2.09 trillion through a bond or share sale and a further N399.9 billion from its shareholders via a rights issue, to fund its growth plans as well as meet up with the new capital requirement.

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For FBN Holdings’ category, the CBN has set a minimum capital threshold of N500 billion.

Notably, this figure only considers a bank’s share capital and share premium, excluding retained earnings. This prevents banks from using past profits to fulfill the capital requirement.

Analysts anticipate banks to respond to this regulation through capital raises, mergers, or acquisitions. FBN Holdings, with a current share capital and share premium of N251 billion, needs to raise at least N248 billion to comply.