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Sterling Bank Launches Indirect Bid to Raise N8b Capital

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Sterling Bank - Investors King
  • Sterling Bank Launches Indirect Bid to Raise N8b Capital

Sterling Bank Plc has secured regulatory approval to raise about N8 billion in new capital as a first step in a large new capital issuance through which the bank seeks to raise a total of N65 billion.

A regulatory document obtained yesterday showed that Sterling Bank would be raising the new capital through an indirect special purpose vehicle known as Sterling Investment Management SPV Plc.

According to the document, Sterling Investment Management SPV will be offering for subscription N7.965 billion in its series 1: seven-year 16.50 per cent fixed rate unsecured bonds due 2023. The maiden issuance is part of the bank’s N65 billion debt issuance programme.

Sources in the know confirmed that the SPV is a tier-11 capital raising programme for Sterling Bank, describing it as a creative way to shield the bank from unnecessary regulatory and market issues while having access to the much-needed capital.

The document indicated that the Nigerian Stock Exchange (NSE) has already approved the debt issuance, paving the way for the bank to conclude the pre-offer opening processes.

Global Credit Ratings (GCR) has accorded a final, public national scale long term rating of BBB (NG) to the N7.97 billion bond; with the outlook accorded as stable. The rating is valid until 31 August 2017.

Managing Director, Sterling Bank Plc, Yemi Adeola, recently said the bank was concluding arrangements to raise tier 2 capital in the second half of this year as improved assets quality and lower cost of fund steadied the performance of the bank in the first half of this year.

He said the bank would in the second half of the year continue to prioritise operating efficiency and ensure moderate loan growth; while continuing to diversify funding sources as our retail banking strategy gains traction.

He added that the bank also remained committed to its plan to conclude its N35 billion tier 2 capital raising.

“As we look to the second half of the year, we remain committed to our plan to conclude our N35 billion tier 2 capital raise, prioritise operating efficiency and ensure moderate loan growth; while continuing to diversify funding sources as our retail banking strategy gains traction. Although, some of the macroeconomic challenges witnessed during the first half of the year will persist, we expect improvements in the Nigerian economy, driven by the implementation of the budget and other fiscal palliatives introduced by the Federal Government,” Adeola assured.

As the Nigerian economy and the banking industry struggled with fiscal and monetary challenges that saw inflation and foreign exchange at their worst in many years, Adeola pointed out that the bank has remained irrepressible as demonstrated by the strength of its core business.

According to him, the bank prioritised improvement in asset quality which was reflected by a 70 basis point decline in the non-performing loans and a 100 basis point reduction in cost of risk. Cost of funds also declined by 120 basis points to 4.7%. This was in spite of the foreign exchange liberalisation policy, the attendant liquidity squeeze and the rising inflation rate which peaked at 16.5 per cent in June 2016.

He pointed out that the bank showed deeper pliability through the re-affirmation of its investment grade ratings at a time when corporate and sovereign ratings were under downward ratings pressure, adding that Sterling Bank has successfully migrated to a world-class CORE banking application, which will enable it to better manage a significant uptick in customer base and ensure the required flexibility to deliver unique services across business segments.

He said the bank has also taken steps to improve staff productivity by introducing a flexible work environment to achieve its goal of building a great workplace and reduce operating expenses.

 

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Crude Oil

Oil Prices Climb as Markets Eye Potential US Rate Cuts in September

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Oil prices rose during the Asian trading session today on speculation that the U.S. Federal Reserve may begin cutting interest rates as soon as September.

Brent crude oil, against which Nigerian oil is priced, increased by 32 cents to $82.95 a barrel, while U.S. West Texas Intermediate crude oil climbed 34 cents to $80.47.

The anticipation of rate cuts stems from recent U.S. inflation and labor market data indicating a trend towards disinflation and balanced employment, according to ANZ Research.

The Federal Reserve is set to review its policy on July 30-31, with expectations of holding rates steady but providing clues for potential cuts in September.

The potential rate cuts could stimulate economic activity, increasing demand for oil. This optimism has been partially offset by recent concerns over China’s slower-than-expected economic growth, which could dampen global oil demand.

President Joe Biden’s announcement to not seek re-election and endorse Vice President Kamala Harris had minimal impact on oil markets.

Analysts suggest that U.S. presidential influence on oil production is limited, although a potential Trump presidency could boost oil demand due to his stance against electric vehicles.

In response to economic challenges, China surprised markets by lowering key policy and lending rates. While these measures aim to bolster the economy, analysts remain cautious about their immediate impact on oil demand.

With OPEC+ production cuts continuing to support prices, the focus remains on the U.S. Federal Reserve’s next moves.

Any decision to cut rates could further influence oil prices in the coming months, highlighting the interconnectedness of global economic policies and energy markets.

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Crude Oil

Dangote Refinery Clash Threatens Nigeria’s Oil Sector Stability

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Crude oil

Nigeria’s oil and gas sector is facing a new challenge as a dispute between Dangote Industries Limited and the Nigerian Midstream and Downstream Petroleum Regulatory Agency (NMDPRA) intensifies.

The disagreement centers on claims by NMDPRA that diesel from the Dangote Refinery contains high sulfur levels, making it inferior to imported products.

The $20 billion Dangote Refinery, located near Lagos, has the potential to process half of Nigeria’s daily oil output, promising to reduce dependency on foreign fuel imports and create thousands of jobs.

However, the recent accusations have cast a shadow over what should be a significant achievement for Africa’s largest economy.

Industry experts warn that the ongoing conflict could deter future investments in Nigeria’s oil sector.

“Regulatory uncertainty is a major disincentive for investors,” said Luqman Agboola, head of energy at Sofidia Capital. “Any factor affecting foreign investment impacts the entire value chain, risking potential energy deals.”

The regulatory body, led by Farouk Ahmed, maintains that Nigeria cannot rely solely on the Dangote facility to meet its petroleum needs, emphasizing the need for diverse sources.

This position has stirred controversy, with critics accusing the agency of attempting to undermine a vital national asset.

Amidst these tensions, energy analyst Charles Ogbeide described the agency’s comments as reckless, noting that the refinery is still in its commissioning stages and is working to optimize its sulfur output.

In response, Dangote Industries has called for fair assessments of its products, asserting that their diesel meets African standards.

The refinery’s leadership argues that certain factions may have ulterior motives, aiming to stifle progress through misinformation.

As the dispute continues, the broader implications for Nigeria’s oil sector remain uncertain. The outcome will likely influence not only domestic production but also the country’s standing in the global energy market.

Observers hope for a resolution that supports both industrial growth and regulatory integrity, ensuring stability in a sector crucial to Nigeria’s economy.

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Crude Oil

Nigeria Pumps 236.2 Million Barrels in First Half of 2024

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markets energies crude oil

Nigeria pumped 236.2 million barrels of crude oil in the first half of 2024, according to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).

This figure represents an increase from the 219.5 million barrels produced during the same period in 2023.

In January, Nigeria produced 44.2 million barrels of crude oil while February saw a slight dip to 38.3 million barrels, with March following closely at 38.1 million barrels.

April and May production stood at 38.4 million barrels and 38.8 million barrels, respectively. June’s output remained consistent at 38.3 million barrels, demonstrating a stable production trend.

Despite the overall increase compared to 2023, the 2024 production figures still fall short of the 302.42 million barrels produced in the same period in 2020.

This ongoing fluctuation underscores the challenges facing Nigeria’s oil sector, which has experienced varying production levels over recent years.

On a daily basis, Nigeria’s crude oil production showed some variability. In January, the average daily production peaked at 1.43 million barrels per day (mbpd), the highest within the six-month period.

February’s production dropped to 1.32 mbpd, with a further decrease to 1.23 mbpd in March. April saw a modest increase to 1.28 mbpd, which then fell again to 1.25 mbpd in May. June ended on a positive note with a slight rise to 1.28 mbpd.

The fluctuations in daily production rates have prompted government and industry leaders to address underlying issues.

Mele Kyari, Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPC), has highlighted the detrimental effects of oil theft and vandalism on Nigeria’s production capabilities.

Kyari emphasized that addressing these security challenges is critical to boosting production and attracting investment.

Kyari also noted recent efforts to combat illegal activities, including the removal of over 5,800 illegal connections from pipelines and dismantling more than 6,000 illegal refineries.

He expressed confidence that these measures, combined with ongoing policy reforms, would support Nigeria’s goal of increasing daily production to two million barrels.

The Nigerian government remains focused on stabilizing and enhancing oil production. With recent efforts showing promising results, there is cautious optimism that Nigeria will achieve its production targets.

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