Banking
CBN Issues Licences to 5 New Banks to Boost Lending
By Dipo Olowookere
Five new banks have been issued operating licences by the Central Bank of Nigeria (CBN) to carry out financial services in the country, Business Day is reporting.
Relying on information from those allegedly familiar with the development, the reputable business journal said one of the new banks may commence operations this week.
However, it said most of the lenders are planning to kick off banking operations in the country before August 2019.
One of the new banks, “Globus” is said to be spearheaded by Elias Igbinakenzua, a former Executive Director at a tier one bank.
Business Post reports that in late 2016, Mr Elias Igbinakenzua resigned from Access Bank and in 2017, he became the CEO of First Aluminium Nigeria Plc.
“The Bank (Globus), whose head office is on Sanusi Fafunwa, Victoria Island, may open by May 2nd,” one of the sources quoted by Business Day said.
The second bank would go by the name “Titan” and is said to have secured the services of a former Heritage bank executive director.
Another owner of one of the new banks is said to be Indian – the former owner of Chi Limited who recently sold a majority stake to Coca Cola – and the initial strategy would be to target large Indian and Lebanese clients with investments in Nigeria especially in the manufacturing and other sectors, sources said.
The other banks remain largely anonymous but would be a mix of micro-finance, Merchant and/or deposit money banks, Business Day added.
It was reported that the apex bank is being driven by the need to attract new investments into the sector and serve the country’s over 50 million unbanked and under-banked people, even as current banks have struggled to grow loan books since an economic slump in 2016 caused bad loans to surge.
CBN spokesperson, Mr Isaac Okorafor, did not respond to calls seeking comment.
Also, three bank CEOs declined to comment, as the CBN is yet to go public on the matter.
BusinessDay gathered from sources that most of the capital needed to set up the banks were sourced locally in Nigeria.
The minimum capital requirement for a Regional bank is N10 billion, while for National banks its N25 billion and international Banks N50 billion, according to the Banks and Other Financial Institutions Act (BOFIA).
The capital requirement of microfinance banks, which was amended by the CBN in 2018, is as follows: For a Unit Microfinance bank, the requirement is N200 million, while its N1 billion and N5 billion for a State and National Microfinance bank respectively.
For a merchant bank, the minimum paid-up share capital is currently N15 billion.
Attempting to place a finger on the motivation for licensing five new banks almost out of the blue, one of the sources said, “The CBN will not want to preside over an industry that is shrinking.”
Another said “Nigeria is under-banked and investors are responding, if the CBN wants to grow credit, by N1 trillion, none of the old banks can take it. Banks available are already at capacity, in one way or another.”
The CBN has been somewhat desperate for banks to increase lending to critical sectors but an economy fraught with risks has tamed lending appetite.
Nigerian banks were unable to grow their loan books in the past year, a signal that the macroeconomic environment remains weak and non-supportive for growth.
The 12 largest lenders quoted on the floor of the Nigerian Stock Exchange (NSE) saw combined loans and advances dip by 6.37 percent to N12.34 trillion in December 2018, from N13.18 trillion a year earlier. This compares with a 25.14 percent increase between the 2013 and 2014 financial year.
The CBN is worried about the trend, Governor Godwin Emefiele indicated in the aftermath of the monetary policy committee last March.
To encourage lending to the real sector, the CBN promised to allow banks draw down from their regulatory cash buffers sitting with the apex bank, if the banks gave loans to manufacturers and players in the agriculture sector at single-digit interest rates.
The response has been largely underwhelming, with banks preferring instead to stash cash in double-digit yielding government debt where they take considerably less risk. Even the CBN’s surprise interest rate cut to 13.5 percent after keeping it at 14 percent for over two years, was not able to move the needle on lending.
The banks argue that to increase lending the CBN should instead reduce the Cash Reserve Ratio (CRR) to free up idle funds. The effective CRR in the sector is as high as 40 percent.
Licensing five new banks can pass for the latest strategy by the CBN to boost bank lending, according to a source.
“However, if the problems that hinder the current banks from growing their loan books persist, then even the new ones will struggle,” the third source said.
Total credit to the private sector grew by a meagre 2.2 percent to N24.16 trillion, according to the CBN’s Depository Corporation survey report for February 2019, another indication of weak credit flow in the economy.
Johnson Chukwu, managing director and CEO of advisory firm, Cowry Asset Management Ltd, said the expansion in credit has been going to the public sector as yields remain attractive at between 13 and 14 percent. “The economic recovery rate has been slow and financial institutions
are cautious of booking new Non Performing Loans (NPLs),” said Chukwu.
Sources tell BusinessDay that the CBN feels that some of the current banks may be becoming a little bit removed from the needs of the average customer.
“The banking public has very few options. The bigger the bank the more distant the relationship. There is at worst an oligopoly and at best a duopoly,” the first source said.
BusinessDay learnt that the licensing is a done deal according to the processes involved which may take up to 2 years. This includes sending the name of directors to the Department of State Security
(DSS), Assistant General Manager’s and above being vetted by CBN, offices and branches inspection, staff recruitment, printing of checks and software deployment.
The emergence of the new banks is good for staff, good for signalling and will increase competition in the sector our sources said.
“When you realize CBN will not allow any bank to fail, you realize there is nothing to fear. You can go ahead and request a license,” the second source said.
By Adedapo Adesanya
Guaranty Trust Holding Company (GTCO) Plc recently completed the raising of N209 billion out of its targeted N400.5 billion public offer in the ongoing recapitalisation efforts directed by the Central Bank of Nigeria (CBN) to create resilient banks amid rising external shocks in the global environment.
Speaking on this development, the chief executive of the firm, Mr Segun Agbaje, said the equity capital raising has set a strong foundation for accelerated development.
“We extend our sincere appreciation to our new and existing shareholders, as well as the regulatory authorities, for their unwavering support during this initial phase of our equity capital raise.
“The strong participation and successful capital verification exercise and allotment process reaffirm the confidence investors have in our fundamentals and execution capabilities.
“This sets a solid foundation for accelerating our strategic roadmap, which aims to pivot the Group for transformational growth and unlock greater value across the Group’s Banking and Non-Banking businesses,” the banker stated.
GTCO had launched a public offer of 9.0 billion ordinary shares of 50 Kobo each at N44.5 per share, with N209.41 billion realized, representing 52.3 per cent of the total offer size.
The offer garnered substantial interest from domestic retail investors, raised a total of N209.41 billion from 130,617 valid applications for 4.706 billion ordinary shares, fully allotted.
“This milestone concludes the first phase of GTCO’s phased equity capital raise programme, which is structured on a balanced allocation strategy based on an equal split between institutional and retail investors. This balanced approach aligns with GTCO Plc’s commitment to fostering a well-diversified and robust investor base,” GTCO stated.
The announcement followed completion of the capital verification exercise conducted by the CBN and the approval of the basis of allotment of the offer by the Securities and Exchange Commission (SEC).
By Modupe Gbadeyanka
No fewer than 30 pregnant women at the Mushin Primary Health Centre in Lagos have received maternity kits from Fidelity Bank Plc.
The gesture from the financial institution is part of its efforts to support improved maternal health in the metropolis.
It was gathered that the items were given to the beneficiaries through the Fidelity Helping Hands Programme (FHHP), a Corporate Social Responsibility (CSR) initiative of the lender aimed at promoting staff involvement in community development under the Great Minds Inductees Class.
“The project was borne out of the need to support pregnant women by providing them with essential materials for a safe delivery,” the Divisional Head for Brand and Communications Division at Fidelity Bank, Mr Meksley Nwagboh, explained.
“Maternal mortality remains a significant public health challenge in Nigeria, with the country accounting for a substantial proportion of global maternal deaths.
“In fact, a 2023 United Nations report indicate that nearly 28.5% of global maternal deaths occur in Nigeria.
“This is an alarming statistic and as a bank given to improving the welfare of our host communities, we deemed it fit to support initiatives to address this challenge in the Mushin community with this donation,” he stated.
One of the beneficiaries, Mrs Mary Olusanya, expressed her heartfelt appreciation for the bank’s support.
“I appreciate Fidelity Bank for helping us. Many pregnant women cannot afford these kits, but this donation ensures that we can have safe deliveries and better healthcare,” she said.
The Medical and Health Officer for Mushin Local Government Area, Dr Kayode Odufuwa, said, “This intervention by Fidelity Bank will help reduce maternal mortality and encourage more women from less-privileged backgrounds to register for antenatal care.”
“On behalf of the Chairman of Mushin LGA, Mr Emmanuel Bamgboye, we want to express our heartfelt gratitude to Fidelity Bank for extending its donation of maternity kits to pregnant women at this centre.
“We appeal for continued collaboration with the Bank to further strengthen healthcare services within the area,” he stated.
On her part, the Apex Nurse and Deputy Director of Nursing Services in Mushin LGA, Mrs Bolanle Odunlami, said, “The donation is a much-needed relief for many mothers who are unable to afford essential delivery kits. Fidelity Bank has truly shown empathy by coming to the aid of our patients, and for that, we are extremely grateful.”
Business Post reports that through the FHHP, employees of the bank identify projects that benefit their immediate community and gather funds to implement them.
The bank’s management then matches this contribution with an equivalent amount and allocates it for the chosen projects.
By Aduragbemi Omiyale
The management of First Bank of Nigeria (FBN) Holdings Plc has assured that the boardroom crisis rocking the company would not affect its operations.
Recall that a group of shareholders with 10 per cent equity stake in the financial institution asked for an Extra-ordinary General Meeting (EGM) under section 215 (1) of CAMA for the removal of the chairman of the board, Mr Femi Otedola, and a non-executive/deputy chief executive of Geregu Power Plc, Mr Julius Omodayo-Owotuga.
They argued that Mr Otedola, who owns Geregu Power, was plotting full control of FBN Holdings by planting his loyalists on the board.
The aggrieved shareholders pointed out that the businessman was planning to take charge of the proposed private placement of N360 billion shares of the firm, accusing him of removing those he felt were blocking his way.
To calm nerves, FBN Holdings issued a statement on Thursday, informing its stakeholders that the crisis does not pose a threat to its services.
“This matter does not in any way impact the operations of the company, and all the businesses within the Group continue to provide uninterrupted services to its customers.
“We assure our valued customers, shareholders, investors, other stakeholders and the general public that we are taking all necessary steps to protect the interests of the company and its subsidiaries.
“The Group’s performance continues to improve, resulting in a higher market capitalisation even as we work towards surpassing the regulatory minimum capital well ahead of the deadline.
“In the meantime, the Registrar and Lead Issuing House are collating the returns from all receiving agents in respect of the company’s rights issue which closed on December 30, 2024.
“FBN Holdings and its subsidiaries remain committed to the highest level of corporate governance,” the notice signed by its scribe, Mr Adewale Arogundade, said.
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