Banking
Two Major Battles Ahead of Tier-2 Nigerian Banks
Dipo Olowookere
Last month, Governor of the Central Bank of Nigeria (CBN), Mr Godwin Emefiele, announced at a media briefing that he would likely force deposit money banks in the country to increase their minimum capital base from its present level within the next five years.
The last recapitalisation of the banking sector was in 2004 under the leadership of Mr Charles Soludo as CBN Governor.
During the exercise, the central bank raised the capital base from N2 billion to N25 billion and for those who could not meet this requirement on their own, they had to merge with others or were acquired by bigger financial institutions.
Since the announcement by Mr Emefiele on June 24, 2019, shareholders of some banks, especially the tier-two and three, have been wondering what could happen next to their companies.
In fact, there was a recent report that Access Bank, which merged with Diamond Bank in March 2019, was planning to acquire Union Bank of Nigeria Plc. But both banks have denied the rumour, saying there was no iota of truth in it.
Though the CBN is yet to announce what the new minimum capital base would be, there are indications that it could be raise by over 100 percent and for some struggling banks, this might be the end of the road for them.
For shareholders of the banks in this category, this is one of the major challenges that might prove too difficult to surmount.
At the last recapitalisation, some financial institutions had to approach the stock market to raise funds to meet the new CBN requirement.
It is not certain if some banks having their share value badly damaged would attract sympathy of their shareholders in raising fresh capital via rights issue or any other means available this time around.
Another critical issue identified by Business Post facing some mid-level banks at the moment is the recent pronouncement by the CBN that deposit money banks in the country should give out 60 percent of their deposits to customers as loan.
Since the apex bank said financial institutions must have a loan-to-deposit ratio of 60 percent by September 30, 2019, many lenders have been devising ways to meet the requirements.
It is however, important to note that four of the five tier-one banks have LDR less than 60 percent.
But these big players in the sector have the capacity to pay for the sanctions stipulated by the central bank for failing to meet up by September 2019.
This may not be the same with these struggling tier-two banks, who are still finding it hard to remain in business because of their Capital Adequacy Ratio (CAR).
Apart from Access Bank Plc, which has an LDR of 69.9 percent, every other banks in its peer are below the 60 percent requirement of the CBN.
GTBank has an LDR of 53.1 percent, First Bank has an LDR of 47.4 percent, UBA has an LDR of 47.9 percent, while Zenith Bank has an LDR of 50.1 percent.
How some tier-two banks will solve the two aforementioned challenges is what some observers would be waiting to see with keen interest. Will their shareholders come to the rescue? Only time will definitely tell.
By Aduragbemi Omiyale
The Central Bank of Nigeria (CBN) has reaffirmed that the old and new Naira notes will continue to be used for financial transactions in the country beyond December 31, 2024.
There had been rumours that the old and redesigned N200, N500, and N1,000 banknotes would no longer be legal tender from Wednesday, January 1, 2025, because the central bank would phase out the notes in compliance with a Supreme Court judgement of November 29, 2023.
But the apex bank, in a statement signed by its acting Director of Corporate Communications, Mrs Hakama Ali, on Friday, clarified that the apex court’s judgement being cited did not authorise the bank to phase out the banknotes by the end of this year.
According to her, the court allowed the CBN to leave the old and new notes to be used concurrently until it decides to gradually phase out the former.
The central bank’s spokesperson urged members of the public to disregard claims suggesting the old series of these denominations would cease to be valid at the end of this year.
She urged them to continue to accept all Naira notes for daily transactions, encouraging banks to also adopt alternative payment methods such as electronic channels to reduce the pressure on physical cash usage.
“The Central Bank of Nigeria (CBN) has observed the misinformation regarding the validity of the old N1000, N500, and N200 banknotes currently in circulation.
“In line with the bank’s previous clarifications and to offer further assurance, the CBN wishes to reiterate that the subsisting Supreme Court ruling granted on November 29, 2023, permits the concurrent circulation of all versions of the N1000, N500, and N200 denominations of the Naira indefinitely.
“For the avoidance of doubt, all versions of the naira, including the old and new designs of N1000, N500, and N200 denominations, as well as the commemorative and previous designs of the N100 denomination, remain valid and continue to be legal tender without any deadlines,” the statement noted.
By Adedapo Adesanya
Access Bank Plc, the banking subsidiary of Access Holdings Plc, has entered into a binding agreement with South African-based Bidvest Group Limited for the acquisition of 100 per cent equity stake in Bidvest Bank Limited.
The deal for the 24-year-old South African lender is due to be completed in the second half of 2025, upon regulatory approval.
This shows Access Bank’s further expansion plans in line with goals set by its late founder, Mr Herbert Wigwe.
The agreement to acquire 100 percent stake in Bidvest Bank reflects Access Bank’s commitment to strengthening its footprint in South Africa and consolidating on its position as the continent’s gateway to global markets as it seeks to optimise the benefits of recent acquisitions and accelerate its transition towards a greater focus on efficiencies.
Bidvest Bank, founded in 2000 is a niche and profitable South African financial institution providing a diverse range of services, including corporate and business banking solutions and diverse retail banking products.
As of its year ended June 2024, Bidvest Bank reported total assets equivalent of $665million and audited profit before tax of $20million.
Upon conclusion of this acquisition, Bidvest Bank will be merged with the bank’s existing South African subsidiary to create an enlarged platform to anchor the regional growth strategy for the SADC region.
This is coming just as the bank opened a new branch in Malta as part of efforts to focus on international trade finance after obtaining a banking licence from the European Central Bank (ECB) and the Malta Financial Services Authority (MFSA).
Access Bank said the licence marks a transformative milestone in bolstering Europe-Africa trade flows.
The Maltese branch was established by Access Bank UK Limited, the subsidiary of Access Bank Plc, which is also the subsidiary of Access Holdings Plc, which is listed on the Nigerian Exchange (NGX) Limited.
By Modupe Gbadeyanka
To strengthen Europe-Africa trade ties, Access Bank has opened a new branch in Malta. It will focus on international trade finance, employing approximately 30 people in its initial phase, with plans for controlled expansion over time.
It was learned that this Maltese branch was established by Access Bank UK Limited, the subsidiary of Access Bank Plc, which is also the subsidiary of Access Holdings Plc, which is listed on the Nigerian Exchange (NGX) Limited.
Access Bank Malta Limited commenced operations after obtaining a banking licence from the European Central Bank (ECB) and the Malta Financial Services Authority (MFSA).
Access Bank said the licence marks a transformative milestone in bolstering Europe-Africa trade flows.
Malta, a renowned international financial centre, and a gateway between the two continents, is strategically positioned to play a pivotal role in advancing commerce and fostering economic partnerships.
This strategic expansion into Malta enables The Access Bank UK Limited to leverage growing trade opportunities between Europe and Africa.
It underscores the organisation’s commitment to driving global trade, financial integration, and supporting businesses across these regions.
“By establishing operations in Malta, we will gain a foothold in a market that bridges European and North African economies, moving us one step closer to our goal of becoming Africa’s Gateway to the World.
“It further enhances our bank’s capacity to support clients with innovative solutions tailored to cross-border trade and investment opportunities,” the chief executive of Access Bank, Mr Roosevelt Ogbonna, stated.
“Europe has emerged as Africa’s leading trading partner, driven by initiatives such as the Economic Partnership Agreements between the EU and African regions and the African Continental Free Trade Area (AfCFTA).
“With Europe-Africa economic relations entering a new phase, The Access Bank Malta Limited is ideally positioned to deepen trade and meet the financing and banking needs of our clients in these expanding markets,” the chief executive of Access Bank UK, Mr Jamie Simmonds, commented.
Also speaking, the chief executive of Access Bank Malta, Renald Theuma, said, “Malta is uniquely positioned as a bridge between Europe and Africa, making it an ideal location for our subsidiary. This move allows The Access Bank Malta Limited to engage more closely with customers in Europe and deliver tailored financial solutions that drive growth and connectivity across both continents.”
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