As the Central Bank of Nigeria (CBN) recapitalization deadline looms closer, Nigerian banks are finalizing their strategies to meet new capital requirements set for April 30. Key industry players are in the final stages of submitting their comprehensive recapitalization plans, which will outline their funding strategies over the next two years, ending March 31, 2026.
Insiders from both Tier 1 and Tier 2 banks confirmed that strategic outlines, acting as roadmaps for recapitalization, have been concluded. These banks are also subtly lobbying for an extension as they prepare to submit their plans to the CBN. The strategic plans suggest that the first offerings under this new framework could appear in the market as early as the third quarter, with a cluster of offers anticipated towards the year's end.
The CBN's recapitalization framework offers banks three primary options: injecting new equity capital, engaging in mergers and acquisitions, and altering their license authorizations. Banks aim to raise over N7 trillion through various offerings, targeting existing shareholders, the general public, high-net-worth individuals, institutional investors, and foreign strategic investors.
One notable mid-tier commercial bank is set to execute a three-step recapitalization to raise nearly N380 billion, essential for maintaining its international banking license. This plan includes a combination of rights issues and public offerings, expected to launch as early as June, followed by private placements and potentially another public offer, if needed, by early 2026.
Meanwhile, Nigeria's five largest banks—including Access Holdings, Guaranty Trust Holdings Company (GTCO), Zenith Bank, and United Bank for Africa (UBA)—are planning to raise approximately N5 trillion. This amount is significantly above what is necessary to meet the CBN's N500 billion minimum capital requirement for banks with international operations.
Specifically, Access Holdings has already secured shareholder approval for a multi-tranche, multi-currency capital raising plan totaling about $1.5 billion and N365 billion. Similarly, Zenith Bank is gearing up for a massive capital increase, creating 34 billion new shares to support its recapitalization efforts. UBA and GTCO are also preparing for substantial capital raises, with UBA planning to increase its share capital significantly through the creation of new shares.
These extensive capital raising initiatives are not just about meeting regulatory requirements but are also aimed at positioning these banks to compete more effectively in a market that might see significant consolidation through mergers and acquisitions, especially in the second half of 2025 and early 2026.
As the deadline approaches, the banking sector remains optimistic, with substantial capital raising efforts expected to enable banks to continue operating as robust standalone entities, well-prepared for the future competitive landscape.
0 Comments