Banking
More Banks to Raise Capital in 2017
By Obinna Chima
The macro-economic challenges in the country as well as the level of depreciation suffered by the nation’s currency, will compel more commercial banks to seek for avenues to beef their capital this year, a Lagos-based investment and research firm, CSL Stockbrokers Limited stated in a report titled: “Capital Adequacy: Pulse Check.”
The move, the firm added, is expected to enable the financial institutions withstand any shock in the industry as well as to remain above the regulatory threshold.
Capital adequacy is a persistent issue for a number of Nigerian banks. Regulatory capital ratios have been impacted by the large depreciation of the naira given the extent of dollar lending in the sector. They have also been hit by the sharp rise in impairments (implying little or no retained earnings).
The Central Bank of Nigeria (CBN) requires that banks with international subsidiaries maintain a capital adequacy ratio (CAR) of 15 per cent while banks without international subsidiaries maintain a CAR of 10 per cent. The minimum requirement for systemically important banks (effective July this year) is 16 per cent.
First City Monument Bank Limited (FCMB) last week sold N5.1 billion bonds, less than it originally planned to raise, at an interest rate coupon of 17.25 percent, its advisers said on Friday. The seven-year bond was issued by way of a book-building with Standard Chartered Bank, local investment bank Chapel Hill Denham and FCMB Capital Markets as book runners. The offer was fully subscribed.
But before the recent Access Bank’s offer, the last Eurobond issued out of Nigeria was in October 2014 by Seven Energy Finance Limited.
Sourcing naira bonds has also become a tough call given high interest rates on treasury bills and FGN bonds.
Wema Bank had embarked on an issue of N20 billion in local currency bonds after scrapping plans in 2015 to issue a $100 million 7-year dollar bond because of currency risks. Sterling Bank also tried to raise a N35 billion local currency-denominated bond last year.
However, a look at banks’ nine months 2016 capital adequacy ratios (CAR), according to the report suggested that the industry may begin to see a flurry of capital raising activities if macro-economic conditions fail to improve.
Nonetheless, the report indicated that the smaller banks may have more difficulty in finding willing investors in their foreign bond market and the domestic market. The bigger banks however appeared to have performed better last year as Guaranty Trust Bank successfully redeemed its $500 million Eurobond early 2016. Access Bank also successfully refinanced its existing senior unsecured $350 million 7.25% notes due July 2017 last year.
Despite challenges in the raising naira bonds, the expectation is that local currency bonds would remain the favoured option, especially for the mid-cap lenders.
According the report, the options available to the banks are limited in the current macro environment.
“Rights issues would be very dilutive given low share prices while raising tier-2 capital, by issuing long-term dollar subordinated debt, is difficult in as US dollar rates can be so high as to make the exercise unprofitable in terms of spreads on US assets.
“Sourcing naira bonds has also become a tough call given high interest rates on treasury bills and FGN bonds. Despite challenges in raising naira bonds, we believe that local currency bonds still remain the favoured option, especially for the mid-cap lenders, ” it added.
The CBN had tried various means in the past months to reduce the widening gap between interbank and parallel market rates. Despite these measures however, the naira has continued on a depreciatory path in the parallel market, and fell to a historic low of N500 to the dollar last week.
Asset quality also remains a problem for the industry. If a bank suffers an unexpected rise in cost of risk (COR) that exceeds the capacity of one year’s profits to absorb it, then that bank will be looking at writing down capital.
“We examine the potential impact on capital of a sudden surge in CoR and a notional further 20 per cent naira devaluation on capital adequacy. A further 20 per cent devaluation will still leave the banks we cover in this report above regulatory limits, although Diamond just barely. “In our first scenario, which assumes 10 per cent of loans to stressed sectors go bad, Zenith, Guaranty Trust Bank, UBA, Access, and Fidelity remain at comfortable capital levels.
“An unexpected surge in CoR, assuming 20 per cent of these loans go bad, however will take all the banks, with the exception of Access, below regulatory limits,” it added.
ThisDay
By Modupe Gbadeyanka
The Chartered Institute of Bankers of Nigeria (CIBN) has promised to support the ambitious plans of the Association of Corporate and Marketing Professionals in Banks (ACAMB).
At a meeting between the leaderships of the two organisations on Tuesday, the president of CIBN, Professor Pius Deji Olanrewaju, said it was impressed with the capability development and the undergraduate mentorship schemes of ACAMB under its leader, Mr Jide Sipe.
The CIBN chief commended the forward-thinking vision of the group, saying it had raised standards across Nigeria’s banking sector.
“ACAMB’s support has given CIBN and the banking sector brand equity,” he said, praising the association’s record in reputation management. recalling ACAMB’s role in addressing crises within the sector, describing the partnership as strategic and beneficial.
He further pledged support for ACAMB’s 30th anniversary in September 2026, its AGM, and other programmes, including fundraising initiatives.
“I want to assure you that everything you have presented today has been clearly noted and will be acted upon.
“We are fully committed to working closely with you so as to translate these discussions and vision into measurable progress. Our shared goal is to strengthen the sector, protect its reputation, and enhance its public image in a meaningful and lasting way.
“This meeting discussed various initiatives and reforms crucial for the future of our industry, including the need for continuous training and adaptation to new programs,” Mr Olanrewaju stated.
Speaking at the meeting, the president of ACAMB described the visit as a crucial first step in his tenure, aimed at contributing significantly to giving flight to his vision and that of ACAMB.
“When we assumed office, one of the first things we agreed on was the need to visit key stakeholders.
“However, before reaching out more broadly, we felt it was important to begin with our primary constituency and core stakeholders. We want them to understand the direction we are taking and to support the work we are doing, so that ACAMB can achieve greater success than it has in the past.
“We couldn’t have properly started our tenure without this very important meeting with the CIBN,” Mr Sipe stated
He introduced the newly constituted ACAMB Exco, which includes the 2nd Vice President, Morolake Phillip-Ladipo; General Secretary, Olugbenga Owootomo; Assistant General Secretary, Ademola Adeshola; Publicity Secretary, Abiodun Coker; and Executive Secretary, Fadekemi Ajakaiye.
By Modupe Gbadeyanka
Registration for the second HerFidelity Apprenticeship Programme (HAP 2.0) organised by Fidelity Bank Plc has commenced.
The Divisional Head of Product Development at Fidelity Bank, Mr Osita Ede, informed newsmen that the initiative was designed to empower women with sustainable entrepreneurship skills.
The lender created the flagship women-empowerment initiative to equip women with practical, income‑generating skills and structured pathways to entrepreneurship.
“HerFidelity Apprenticeship Programme 2.0 reflects our commitment to continuous improvement. Having evaluated feedback from the first edition, we have returned with stronger partnerships and deeper mentorship programmes to ensure that women acquire not just skills, but sustainable economic opportunities,” he said.
“At the heart of the programme is guided, real‑world learning. Participants will undergo intensive apprenticeship training under reputable institutions and industry experts across select fields such as hair styling, shoe making, auto mechatronics, and interior decoration,” Mr Ede added.
He noted that HerFidelity Apprenticeship Programme 2.0 goes beyond skills acquisition by offering participants a wide range of business advisory services. These include business and financial literacy training, mentorship support throughout the apprenticeship journey, access to Fidelity Bank’s women‑focused and SME financial solutions, as well as guidance on business formalisation and growth strategies.
Further emphasising the bank’s vision, Mr Ede said, “By integrating structured mentorship with entrepreneurial development, Fidelity Bank is positioning women not just as trainees, but as future employers, innovators, and economic contributors within their communities. This aligns with our mandate to help individuals grow, businesses thrive, and economies prosper.”
By Modupe Gbadeyanka
A new branch of The Alternative Bank (AltBank) has been opened in Ondo State as part of the expansion drive of the financial institution.
A statement from the company disclosed that the new branch would support export-oriented agribusinesses through Letters of Credit and commodity-backed trade finance, ensuring that local producers can scale beyond state borders.
For SMEs, the bank is introducing robust payment rails, asset financing for equipment and inventory, and supply chain-backed facilities that strengthen working capital without trapping businesses in interest-based debt cycles.
The Governor of Ondo State, Mr Lucky Aiyedatiwa, represented by his Chief of
Staff, Mr Olusegun Omojuwa, at the commissioning of the branch, underscored the importance of financial institutions in economic development.
“The pivotal role of financial institutions to economic growth and development of any economy cannot be overemphasised. It provides access to capital, supporting small and medium-scale enterprises and encouraging savings.
“Therefore, I have no doubt in my mind that the presence of The Alternative Bank in Ondo State will deepen financial services, create employment opportunities and stimulate economic activities across various sectors,” he said.
In her remarks, the Executive Director for Commercial and Institutional Banking (Lagos and South West) at The Alternative Bank, Mrs Korede Demola-Adeniyi, commended the state government’s leadership and outlined the lender’s long-term vision for Ondo State.
“As Ondo State steps into its next fifty years, and into the future anchored on the sustainable development championed during the recent anniversary celebrations, The Alternative Bank is here to be the financial engine for that vision. We didn’t come to Akure to hang banners. We came to fund work, farms, shops, and factories.”
With Ondo State’s economy anchored largely on agriculture, particularly cocoa production, poultry farming, and other cash crops, alongside a growing SME and trade ecosystem, AltBank is deploying sector-specific financing solutions tailored to these strengths.
For cocoa aggregators, processors and poultry operators, the bank will provide production financing, facility expansion support, machinery lease structures, and structured trade facilities under its joint venture and cost-plus financing models, with transaction cycles of up to 180 days for commodity trades and longer-term structured asset financing for equipment and infrastructure.
The organisation is a notable national non-interest bank with a physical network now surpassing 170 locations, deploying capital to solve real-world challenges through initiatives such as the Mata Zalla project, which saw to the training of hundreds of women as electric tricycle drivers and mechanics.
-
Feature/OPED6 years agoDavos was Different this year
-
Travel/Tourism10 years ago
Lagos Seals Western Lodge Hotel In Ikorodu
-
Showbiz3 years agoEstranged Lover Releases Videos of Empress Njamah Bathing
-
Banking8 years agoSort Codes of GTBank Branches in Nigeria
-
Economy3 years agoSubsidy Removal: CNG at N130 Per Litre Cheaper Than Petrol—IPMAN
-
Banking3 years agoSort Codes of UBA Branches in Nigeria
-
Banking3 years agoFirst Bank Announces Planned Downtime
-
Sports3 years agoHighest Paid Nigerian Footballer – How Much Do Nigerian Footballers Earn