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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.

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Crude Oil

Oil Prices Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Crude Oil

Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Energy

Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Crude Oil - Investors King

Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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Commodities

Palm Oil Rebounds on Upbeat Malaysian Exports Amid Indonesian Supply Concerns

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Palm Oil - Investors King

Palm oil prices rebounded from a two-day decline on reports that Malaysian exports will be robust this month despite concerns over potential supply disruptions from Indonesia, the world’s largest palm oil exporter.

The market saw a significant surge as Malaysian export figures for the current month painted a promising picture.

Senior trader David Ng from IcebergX Sdn. in Kuala Lumpur attributed the morning’s gains to Malaysia’s strong export performance, with shipments climbing by a notable 14% during March 1-25 compared to the previous month.

Increased demand from key regions like Africa, India, and the Middle East contributed to this impressive growth, as reported by Intertek Testing Services.

However, amidst this positivity, investors are closely monitoring developments in Indonesia. The Indonesian government’s contemplation of revising its domestic market obligation policy, potentially linking it to production rather than exports, has stirred market concerns.

Edy Priyono, a deputy at the presidential staff office in Jakarta, indicated that this proposed shift aims to mitigate vulnerability to fluctuations in export demand.

Yet, it could potentially constrain supply availability from Indonesia in the future to stabilize domestic prices.

This uncertainty surrounding Indonesian policies has added a layer of complexity to palm oil market dynamics, prompting investors to react cautiously despite Malaysia’s promising export performance.

The prospect of Indonesian supply disruptions underscores the delicacy of global palm oil supply chains and their susceptibility to geopolitical and regulatory factors.

As the market navigates these developments, stakeholders remain attentive to both export data from Malaysia and policy shifts in Indonesia, recognizing their significant impact on palm oil prices and market stability.

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