Market News
New CBN capital rules may trigger N972bn equity scramble – Report - PUNCH
Nigerian banks’ holding companies may be required to raise a combined N971.764bn in fresh equity if the Central Bank of Nigeria implements its proposed capital framework in its current form, with Access Holdings alone accounting for nearly 68 per cent of the projected shortfall, according to Renaissance Capital Africa.
The investment firm identified Access Holdings Plc, FCMB Group Plc, First HoldCo Plc, Guaranty Trust Holding Company Plc and Stanbic IBTC Holdings Plc as the lenders likely to be affected. It said that Access Holdings would need N656.037bn, followed by First HoldCo with N135.033bn, FCMB with N112.836bn, GTCO with N56.019bn and Stanbic with N11.839bn.
Renaissance Capital said its projections assume the CBN adopts the draft rules without significant changes and allows banks to redeploy excess capital released from subsidiaries that downgrade their international banking licences to national licences, provided those subsidiaries retain enough capital to cover their risks.
Access Holdings’ capital coverage ratio is expected to rise from 0.6 times under the current guidelines to 1.2 times under the post-guidelines estimate.
FCMB’s holding company paid-up capital will likely rise from N512.344bn to N625.179bn, representing an estimated capital raise of N112.836bn.
First HoldCo’s paid-up capital could increase from N480.616bn to N615.649bn, indicating N135.033bn in additional equity capital.
The paid-up capital of its bank subsidiary will stay at N500.027bn, while that of its non-bank subsidiaries is expected to remain at N13.014bn. Renaissance Capital did not factor in any paid-up capital for foreign subsidiaries, though it said the sum of all subsidiaries’ paid-up capital could remain at N513.041bn.
GTCO’s paid-up capital is estimated to rise from N518.880bn to N574.899bn, indicating an estimated capital raise of N56.019bn.
On the other hand, Stanbic’s holding company’s paid-up capital is expected to rise from N255.006bn to N266.845bn, marking an estimated capital raise of N11.839bn.
First HoldCo’s holdco capital coverage ratio would rise from 0.9 times to 1.2 times. The report showed that the sum of all subsidiaries’ paid-up capital will likely fall from N633.119bn under the current guidelines to N479.082bn after the proposed guidelines.
The paid-up capital of FCMB’s Nigerian bank is expected to stay at N500.500bn, while the paid-up capital of its non-bank subsidiaries could remain at N8.809bn and that of its foreign subsidiaries at N11.674bn. The sum of all subsidiaries’ paid-up capital may therefore remain unchanged at N520.983bn.
