Home Corporate News Roadmap For Recapitalization Of FCMB Okayed By Board

Roadmap For Recapitalization Of FCMB Okayed By Board


The board of FCMB Group Plc during the week approved a roadmap for the recapitalisation of the group’s commercial banking subsidiary-FCMB Limited.

Directors of FCMB at their meeting yesterday reviewed the plans to raise additional equity capital to ensure FCMB Limited meets the new minimum capital base of N200 billion for its national commercial banking license category.

At the end of the meeting, the board approved the bank’s plan, which is expected to be submitted to the Central Bank of Nigeria (CBN). Also, the board approved the first quarter results of the group, which is expected to be released alongside the delayed audited results for 2023.

Company Secretary, FCMB Group Plc, Mrs Olufunmilayo Adedibu confirmed the approval of the recapitalisation roadmap and the first quarter results in a regulatory filing after the meeting.

The Nation had on Monday exclusively reported that banks were finalising their recapitalisation plans ahead of the deadline for the submission of the strategic work plans that will serve as supervisory guides for the CBN.

Under the recapitalisation plan, banks are required to submit step-by-step activities, transactional details, instruments and other options for their recapitalisation not later than April 30, 2024. The plans will cover the two-year compliance period ending March 31, 2026.

Banks’ insiders and professional parties in the know of the ongoing recapitalisation decisions had told The Nation that the recapitalisation plans by most banks had been concluded, with directors and professional parties making final adjustments of market-based values and timelines.

The sources, who preferred anonymity because of their roles, said about one-third of banks plan to increase their capital base mainly through capital raising, while other banks outline prospects for combination of capital raising and mergers and acquisitions. Some two banks were said to be considering downgrade of their licenses as final options in addition to prospects of mergers and acquisitions.

While all the tier 1 banks appeared confident of raising the required funds on a standalone basis, they also indicated their preparedness to explore acquisition of other banks.

According to timelines of activities, not less than seven banks are expected to float their share offerings in the second half of this year. The capital market is expected to be busier in 2025.

An investment banking advisor said many big banks were seeking to raise more-than-needed funds in order to be in a position to cherry-pick when the recapitalisation fever pitches in mid-2025.

Under the new recapitalisation framework, banks have three broad options of injection of new equity capital, mergers and acquisitions and upgrade or downgrade of licence authorisation.

The CBN had last month released its circular on review of minimum capital requirement for commercial, merchant and non-interest banks. The apex bank increased the new minimum capital for commercial banks with international affiliations, otherwise known as mega banks, to N500 billion; commercial banks with national authorisation, N200 billion and commercial banks with regional license, N50 billion.

Others included merchant banks, N50 billion; non-interest banks with national license, N20 billion and non-interest banks with regional license will now have N10 billion minimum capital. The 24-month timeline for compliance started yesterday and ends on March 31, 2026.

Credit: thenationonlineng.net

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