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More Banks to Raise Capital in 2017

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  • More Banks to Raise Capital in 2017

The macro-economic challenges in the country as well as the level of depreciation suffered by the nation’s currency, will compel more commercial banks to seek for avenues to beef their capital this year, a Lagos-based investment and research firm, CSL Stockbrokers Limited stated in a report titled: “Capital Adequacy: Pulse Check.”

The move, the firm added, is expected to enable the financial institutions withstand any shock in the industry as well as to remain above the regulatory threshold.

Capital adequacy is a persistent issue for a number of Nigerian banks.

Regulatory capital ratios have been impacted by the large depreciation of the naira given the extent of dollar lending in the sector. They have also been hit by the sharp rise in impairments (implying little or no retained earnings).

The Central Bank of Nigeria (CBN) requires that banks with international subsidiaries maintain a capital adequacy ratio (CAR) of 15 per cent while banks without international subsidiaries maintain a CAR of 10 per cent. The minimum requirement for systemically important banks (effective July this year) is 16 per cent.

First City Monument Bank Limited (FCMB) last week sold N5.1 billion bonds, less than it originally planned to raise, at an interest rate coupon of 17.25 percent, its advisers said on Friday. The seven-year bond was issued by way of a book-building with Standard Chartered Bank, local investment bank Chapel Hill Denham and FCMB Capital Markets as book runners. The offer was fully subscribed.

But before the recent Access Bank’s offer, the last Eurobond issued out of Nigeria was in October 2014 by Seven Energy Finance Limited.

Sourcing naira bonds has also become a tough call given high interest rates on treasury bills and FGN bonds.

Wema Bank had embarked on an issue of N20 billion in local currency bonds after scrapping plans in 2015 to issue a $100 million 7-year dollar bond because of currency risks. Sterling Bank also tried to raise a N35 billion local currency-denominated bond last year.

However, a look at banks’ nine months 2016 capital adequacy ratios (CAR), according to the report suggested that the industry may begin to see a flurry of capital raising activities if macro-economic conditions fail to improve.

Nonetheless, the report indicated that the smaller banks may have more difficulty in finding willing investors in their foreign bond market and the domestic market. The bigger banks however appeared to have performed better last year as Guaranty Trust Bank successfully redeemed its $500 million Eurobond early 2016. Access Bank also successfully refinanced its existing senior unsecured $350 million 7.25% notes due July 2017 last year.

Despite challenges in the raising naira bonds, the expectation is that local currency bonds would remain the favoured option, especially for the mid-cap lenders.

According to the report, the options available to the banks are limited in the current macro environment.

“Rights issues would be very dilutive given low share prices while raising tier-2 capital, by issuing long-term dollar subordinated debt, is difficult in as US dollar rates can be so high as to make the exercise unprofitable in terms of spreads on US assets.

“Sourcing naira bonds has also become a tough call given high interest rates on treasury bills and FGN bonds. Despite challenges in raising naira bonds, we believe that local currency bonds still remain the favoured option, especially for the mid-cap lenders, ” it added.

The CBN had tried various means in the past months to reduce the widening gap between interbank and parallel market rates. Despite these measures however, the naira has continued on a depreciatory path in the parallel market, and fell to a historic low of N500 to the dollar last week.

Asset quality also remains a problem for the industry. If a bank suffers an unexpected rise in cost of risk (COR) that exceeds the capacity of one year’s profits to absorb it, then that bank will be looking at writing down capital.

“We examine the potential impact on capital of a sudden surge in CoR and a notional further 20 per cent naira devaluation on capital adequacy. A further 20 per cent devaluation will still leave the banks we cover in this report above regulatory limits, although Diamond just barely. “In our first scenario, which assumes 10 per cent of loans to stressed sectors go bad, Zenith, Guaranty Trust Bank, UBA, Access, and Fidelity remain at comfortable capital levels.

” An unexpected surge in CoR, assuming 20 per cent of these loans go bad, however will take all the banks, with the exception of Access, below regulatory limits,” it added.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Finance

CBN Freezes Another 194 Accounts of firms, BDCs, Others

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Godwin Emefile

The Central Bank of Nigeria on Thursday said it got orders from the Federal High Court, Abuja division, to freeze 194 bank accounts belonging to firms and Bureaux de Change to enable it to conduct investigations into suspicious activities.

It disclosed this on Thursday in three separate documents on its website.

In one of the documents, the CBN said it got an order to freeze 60 bank accounts of Bluebeam Capital Limited.

The accounts were domiciled in 13 different banks, the CBN as the plaintiff stated.

Bluebeam, as the respondent had eight accounts each in Access Bank and Keystone Bank; seven each in First Bank and Ecobank; five each in UBA and GTBank; four each in Fidelity Bank, FCMB and Sterling Bank; three accounts in Polaris Bank; two each in Wema Bank and Heritage Bank; and one in Providus Bank.

In another document, the CBN said it got an order to freeze 84 accounts in 17 banks.

The third document revealed that the banking regulator had the court order to freeze 50 accounts domiciled in different banks.

The motions exparte which were signed on different dates sought the orders of the court to direct the banks to freeze all other bank accounts of the defendants for a period of 180 days, pending the outcome of investigation and inquiry being conducted by the CBN.

In the document signed by the Presiding Judge, A.R. Mohammed, the court empowered the CBN to direct the banks to freeze all the bank accounts for a period of 45 days only, pending the outcome of the investigation.

It added that the order may be extended upon good reasons shown.

Any person aggrieved by this order could apply to the court to have the order set aside, discharged or have the order reviewed upon good reasons without waiting for the 45 days to lapse, the document stated.

The CBN on Wednesday disclosed it got an order to freeze 11 bank accounts to enable it conduct investigations into suspicious activities.

It had listed the names of the defendants/respondents as Albert Austin Ugochukwu with two bank accounts; Belfour Energy & Allied Services; Belfour Oil and Gas Limited with three bank accounts; Circle Flow Integrated Services; Kacynaus Reality Nigeria Limited with three bank accounts; and Tasmara Integrated Services.

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Banking Sector

Insider Dealing: Henry Oroh, An Executive Director of Zenith Bank, Acquires N46.982 Million Worth of Zenith Bank Shares

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Henry Oroh -Investorsking.com

Henry Oro, an executive director of Zenith Bank Plc, has dumped N46.982 million on shares of Zenith Bank, according to the latest filing with the Nigerian Stock Exchange.

The executive director purchased Zenith Bank’s shares of 724,527 on April 1st, 2021 at N22.05 each or N15.976 million.

On April 6th, Oroh added 612,573 shares at N22 a unit and another 400,000 units at N21.90 per share.

On the same day, he purchased another 400,000 units at N21.90 a share. Bringing aggregate purchase on April 6th to 1,412,573 at an average price of N21.95 a unit or N31.006 million.

Henry Oroh has spent a total of N46.982 million on Zenith shares in April.

Henry Oroh was appointed as Zenith Bank’s executive director on September 1st, 2019 and holds a Bachelor’s Degree in Accounting from the University of Benin, Edo State and an MBA from the Lagos State University as well as an LLB Degree from the University of London.

He is a Fellow of the Institute of Chartered Accountants of Nigeria (ICAN) and an honorary member of the Chartered Institute of Bankers (CIBN), Nigeria.

He has over two decades of banking experience. He began his banking career in 1992 at Citibank where he served for seven (7) years in Operations, Treasury and Marketing.

He joined Zenith Bank in February 1999 and has worked in various Groups and Departments within the Zenith Group Office. His expertise spans Operations, Information Technology, Treasury, Marketing, including the Manufacturing, Food and Beverages, Pharmaceuticals, Oil and Gas, Public Sector, Consumer, as well as Corporate Banking and Business Development.

In April 2012, he was seconded to Zenith Bank Ghana Limited as an Executive Director and became the Managing Director/ Chief Executive in February 2016, where he successfully spearheaded the phenomenal growth of the Zenith Brand both within the Ghana market and the West African sub-region.

Henry has attended several Leadership Programmes and Executive Management Courses at the Harvard Business School, Columbia Business School, New York, University of Chicago, University of Pennsylvania, HEC Paris, JP Morgan Chase, UK and the Lagos Business School.

He comes to the Board of Zenith Bank Plc with strong competencies in Credit & Marketing, Operations, Information Technology, Treasury and impressive Leadership skills.

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Banking Sector

Access Bank Lagos City Marathon Adopts Virtual Audience For 10km Runners

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In a bid to ensure the health and safety of all runners and essential service workers amid the global COVID-19 pandemic, the title sponsors of the Access Bank Lagos City Marathon, Access Bank PLC, has announced that the Lagos City Marathon will be held virtually for interested 10km runners this year.

The marathon, scheduled for April 10, 2021 can only accommodate 300 runners in line with the guidelines provided by the World Health Organisation (WHO), World Athletics and the Lagos State Ministry of Health.

Speaking on the development, Access Bank’s Executive Director of Retail Banking, Victor Etuokwu said, “Our primary consideration is the health and safety of participants, attendees and staff that will be a part of the Lagos City Marathon. This is why we decided to have an exclusive virtual event – that allows participants from all over the world to run the race wherever they are.

‘’While we regret that we can’t host the live 10km race and fanfare that have become synonymous with the Access Bank Lagos City Marathon, we continue to stand with the other sponsors to preserve public health as we look forward to hosting a successful marathon. We implore all well-meaning Lagosians to please adhere to the movement guidelines put in place by the Lagos State Government to ensure that the marathon fulfills its purpose of positively placing Lagos and indeed the whole of Africa on the global map,” he concluded.

Though audience participation may have changed, the organisers have also announced that the race route will largely remain the same. Runners will begin the race from the National Stadium, Surulere, opposite Teslim Balogun Stadium and finish at the Eko Atlantic City, Victoria Island.

Now in its sixth edition, the Silver – Labelled Access Bank Lagos City Marathon has featured over 200,000 registered athletes from over 12 participating countries collectively covering a distance of 42,000 kilometers.

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