How Nigerian banks plan to meet recapitalisation conditions

By Taofik Salako

More details were gathered at the weekend on how banks plan to achieve the new minimum capital requirements ahead of tomorrow’s deadline for banks to submit their implementation strategies for the recapitalisation to the Central Bank of Nigeria (CBN).

Many of the banks are expected to submit their final strategies between today and tomorrow, although a subtle lobby for extension is ongoing.

Outlines of the strategic plans by the banks showed that the first set of offers under the current dispensation may hit the market in early third quarter, with a slight cluster of offers expected in the last four months of the year.

According to the plans, banks may raise more than N7 trillion in multiple offerings to existing shareholders, general investing public, private high networth individual and institutional investors and foreign strategic investors.

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

The CBN recapitalisation framework gives banks three broad options of injection of new equity capital, mergers and acquisitions and upgrade or downgrade of licence authorisation.

In the ongoing recapitalisation, CBN uses a distinctive definition of the new minimum capital base for each category of banks as the addition of share capital and share premium, as against the previous use of shareholders’ funds. While many banks have shareholders’ funds in excess of the new minimum capital base, their share premium and share capital significantly fall short of the new minimum definition.

Industry sources, who preferred anonymity because of the roles they are playing, said directors of most banks have signed off on the strategic work plans for submission to the CBN, noting that such documents do not require notification of statutory board meeting before the board could approve the plan.

The implementation strategies indicated that most banks, currently more than two-thirds, plan to undertake equity capital raising, with rights issue the first option as existing major investors seek to protect their controls. There were few considerations for dividend conversion option, an existing practice that allows shareholders to elect to convert their cash dividends to equities, subject to regulatory approval.

There is a groundswell of optimisms in the sector, with most banks outlining substantial capital raising that could make them to continue as standalone entities.

An investment banking adviser said there were preliminary feelers of mergers and acquisitions noting that business combinations may play big in the second half of 2025 and in the first quarter of 2026.

A mid-tier commercial bank, which recently acquired a United Kingdom subsidiary, plans a three-step recapitalisation to raise nearly N380 billion needed to retain its international banking licence. The bank expects to roll out a combined rights and public offering, which may hit the market as early as June. It will thereafter seek funds from private investors under a special placement arrangement. Where there is any remaining gap, the bank will round off with a new public offer in a multi-layered issuance plan expected to culminate in first quarter 2026 ahead of the March 31, 2026 deadline for the recapitalisation.

Nigeria’s five largest banks-Access Holdings, Guaranty Trust Holdings Company (GTCO), Zenith Bank, and United Bank for Africa (UBA), are raising about N5 trillion, although half of that size will be more than enough for the banks to meet their minimum capital requirements. All the banks in this category falls under the N500 billion international authorisation category.

Large banks are raising more funds to play in competitive acquisitions market, when the recapitalisation hits a heat in the second half of 2025.

Already, shareholders of Access Holdings have approved the company’s plan to raise $1.5 billion and N365 billion in a multi-tranche, multi-currency and multi-instrument capital raising plans.

Access Holdings is expected to lead with the rights issue of N365 billion, which allows the company to surpass its target of N500 billion new minimum capital base.

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

FCMB Group, which emerged from a core base of investment banking and successful history of fund raising, plans to raise equity funds and retain its brand. An informed source however said the group is opened to business combination that does not undermine its brand essence.

Zenith Bank has indicated it was on course to receiving the needed shareholder’s approval, which will kick-start its capital raising effort. Shareholders of the bank are scheduled to meet next week to consider multiple resolutions on the share offering and recapitalisation plan.

Zenith Bank, which at the weekend rounded off conversion to holding company structure, is creating new 34 billion ordinary shares of 50 kobo each for a multi-layered capital raising process that could see the bank with nearly N1 trillion.

Shareholders of UBA are also scheduled to meet next month at their annual general meeting to consider and approve a multi-tranche, multi-instrument capital raising programme that allows UBA to substantially raise more than necessary to surpass the new minimum capital base. The bank plans to increase its share capital from N17.1 billion of 34.2 billion ordinary shares of 50 kobo each to N22.5 billion of 45 billion shares through the creation of 10.8 billion new ordinary shares of 50 kobo each. The broad mandate will empower the board to create additional shares, determine appropriate combination of instruments and markets, underwrite the offers and waive the rights of shareholders in offering unallotted shares to new investors.

GTCO is seeking shareholders’ approval for a $750 million multi-tranches, multi-instrument capital raising. The group is creating new 15 billion ordinary shares of 50 kobo each for its new share issuance programme.

Stanbic IBTC Holdings Plc has launched a N550 billion capital raising process, including a rights issue of N150 billion and a N400 billion debt capital raising. Shareholders of the company will meet next month to authorize the board “to raise additional equity capital of up to N150 billion by way of a rights issue or offer for subscription on such terms, tranches, conditions and dates as may be determined by the directors”.

The company, which had in many instances dividend-equity conversion, is also seeking shareholders’ approval to reaffirm the company’s dividend conversion scheme under which shareholders may be permitted to elect to receive new ordinary shares in the company, credited as fully paid, instead of the whole or any part of any cash dividends declared by the company.

Following the completion of the additional equity capital raise, the issued and paid up share capital of the company will be increased from N6.478 billion divided into 12.957 billion ordinary shares of 50 Kobo each to a maximum of up to N8.25 billion by the creation of up to 3.54 billion ordinary shares of 50 Kobo each.

FBN Holdings, which had secured earlier approval to raise some N150 billion, had cancelled an extraordinary general meeting called to consider a N300 billion capital raising plan. Market analysts had said they expected FBN Holdings to review its recapitalisation plan upward.

The CBN 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.

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