Fresh Recapitalisation: Bank CEOs, others in merger, acquisition talks

Indications emerged on Saturday that the Chief Executive Officers (CEOs) and other top executives of Deposit Money Banks had begun moves to raise fresh capital to bolster their respective institutions’ capital base in line with the pronouncement of the Governor of the Central Bank of Nigeria, (CBN), Dr. Olayemi Cardoso.

It was gathered from top sources in the banking industry that the top executives might have also commenced preliminary merger and acquisition talks, as some of the big banks are eyeing some weaker ones for possible acquisition, while some middle strength and weak ones are looking for alliances that may result in mergers.

Cardoso had said in Lagos, on Friday, that the apex bank would be asking the DMBs to increase their capital base in order to service the $1tn economy projected by President Bola Tinubu.

Speaking at the 58th Annual Dinner of the Chartered Institute of Bankers of Nigeria where he was the special guest of honour, Cardoso said, amongst others “The administration economic agenda has set an ambitious goal of achieving a GDP of $1trillion over the next seven years.

“Attaining this target necessitates sustainable and inclusive economic growth at a significantly higher pace than current levels. It is crucial to evaluate the adequacy of our banking industry to serve the envisioned larger economy.

“It is not just about its current stability. We need to ask ourselves: Can Nigerian banks have sufficient capital relative to the finance system needs in servicing a $1tn economy in the near future, in my opinion, the answer is no, unless we take action. As a first test, the Central Bank will be directing banks to increase their capital.

“Therefore, we must make difficult decisions regarding capital adequacy. As the first step, the CBN will be directing banks to increase their capital”.

A bank CEO, who spoke to newsmen on the latest development, welcomed the CBN policy direction regarding the recapitalisation of the banks, and said his institution was ready to raise fresh capital though it had yet to conclude the modalities.

In the last few months, First Bank of Nigeria Holdings, Wema Bank and Jaiz Bank have proposed Rights Issues, while Fidelity Bank announced plans to raise additional capital via the issuance of 13,200 billion ordinary shares via public offer and rights issue.

The President, Association of Corporate and Marketing Communications Professionals in Banks, Rasheed Bolarinwa, advised members of the public to wait for the formal unveiling of the re-capitalisation plan so as to know the details.

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