By Dipo Olowookere
One of the oldest indigenous financial institutions in Nigeria, Wema Bank Plc, is looking to acquire a fintech company or merge with another bank in the country.
Also, the lender is considering raising fresh funds from the capital market through a rights issue to boost its capital base as its Capital Adequacy Ratio (CAR) in the third quarter of the year depleted to 11.35 per cent from 15.01 per cent in the full year of 2020.
Recall that in 2013, Wema Bank embarked on a recapitalisation exercise by raising N40 billion from private and institutional investors.
This was done through the sale of about 26.7 billion ordinary shares at N1.50 per unit. This then increased its CAR from -16 per cent in 2012 to 27 per cent after the exercise. This also upgraded its banking licence to national in 2014 and expanded its reach.
Business Post gathered that Wema Bank wants to further grow its operations now and is looking at a number of financial institutions in its category for the merger and according to a source within the industry, the board and management are taking their time about this step.
Commenting on this development, Meristem, a leading stockbroking firm in the country, said “the move is considered necessary to keep the bank competitive especially in view of the proposed Basel III-compliant regulatory environment.”
It further said the “additional capital will improve the bank’s funding and assets base while positioning it for opportunities across Nigeria’s evolving financial industry landscape.”
Wema Bank is a tier-two bank that is gradually recording growth after being in the low for a while. It is believed to have the potentials to compete favourably with other mid-level lending institutions in the country like Fidelity Bank, Sterling Bank, Stanbic IBTC, amongst others.
The bank is doing quite well in the digital banking space with its ALAT platform, which is contributing to its earnings and attracting younger generations to the company.
Before the advent of ALAT, Wema Bank was mainly seen as a lender for the older generations and low-income earners and was not attractive to the youths.
In its financial statements for the first nine months of this year, the ALAT platform recorded higher customer counts and transaction volumes, supporting its non-funded income. This has made the management focus on the digital channel to drive growth, fuelling the desire to acquire a fintech firm to improve its earnings.
Aduragbemi Omiyale