FCMB Group plans second public offer in race for N500 billion recapitalisation

FCMB Group is turning to the market soon to source more cash in the second phase of the share sales that helped raise N147.5 billion from the public last year to further its recapitalisation goals.

The board of directors has shareholders’ backing from an extraordinary general meeting in December to proceed with the arrangement, the group disclosed on Friday, intending to announce the next move when the Securities and Exchange Commission, approves.

“The board is keen to commence the offer based on a live market price while ensuring that the Offer price reflects an appropriate discount,” a notification to the Nigerian Exchange stated

How much the banking group is looking to raise is still under wraps. Nevertheless, a resolution from the last December meeting has already given it the freedom to increase the target of its initial capital raise plan from N150 billion to N340 billion.

First City Monument Bank, the company’s commercial banking division, and other Nigerian lenders with overseas operations are required by the latest industry reforms to enlarge their paid-up capital to N500 billion not later than next March.

The tenfold increase from the previous threshold became an urgent requirement for the lenders after a series of devaluations and record inflationary pressures sharply eroded the time value of the naira between the last banking sector recapitalisation round in 2004 and now.

For that reason, the need for banks to create large buffers to augment core capital has become necessary to drive growth on a large scale and become competitive even within Africa, where it has now fallen to fourth place from being the biggest economy two years ago.

The Central Bank of Nigeria (CBN) said it is pushing ahead with higher capital requirements for banks with international, national and regional licenses as a major plank in the government’s goal of expanding the GDP to $1 trillion from $243 billion by 2030.

Commercial, merchant and non-interest banks are the categories affected by the new capital rules.

A company source, not wanting to be named, told PREMIUM TIMES that FCMB Group’s current capital has already surpassed the level required for national authorisation by virtue of its recent capital raise efforts, adding that the offer for subscription will take it closer to its target.

At the end of its last rate-setting meeting in July, the CBN stated that eight Nigerian banks have met the recapitalisation requirements so far.