The parent company of Nigeria’s oldest bank, FBN Holdings, has initiated a ₦150 billion rights issue. In response to increased capital requirements set by the Central Bank, the Group Managing Director, Nnamdi Okonkwo, mentioned that the bank’s capital raise plan began in 2023.
During a presentation on the Nigeria Exchange Limited (NGX) floor, Okonkwo stated, “We identified the necessary firepower and opted for a ₦150 billion issue. Following this, we plan to seek approval for an additional ₦350 billion at our next AGM,”
The bank aims to offer 5,982,548,799 shares at ₦25.00 per share to its shareholders, with the rights issue closing on December 12, 2024.
Okonkwo explained, “With a current capital of ₦270 billion and the CBN’s requirement to reach ₦500 billion, our current ₦150 billion raise aims to surpass expectations. We plan to request approval for an additional ₦300 billion at the next AGM, which would position us with a capital of ₦730 billion.”
FBN Holdings is among the tier-1 banking groups striving to meet capital requirements, alongside Guaranty Trust Holding Company GTCO, Access Holdings, and others. Collectively, Nigeria’s largest banks have raised a total of ₦1.26 trillion.
Amid increasing inflation, FBN Holdings highlights the strength of its diversified portfolio and numerous subsidiaries, including the largest agent banking network in Nigeria, holding a 20% market share.
Okonkwo emphasized, “Our diversified structure is intentional, allowing us to optimize our portfolio, strengthen key areas, and streamline operations. By leveraging our diversified businesses and shared resources, we aim to maximize efficiency.”
For the first nine months of 2024, FBN Holdings reported a profit before tax of ₦1610.9 billion, marking a 128% increase from the previous year. Notably, the company divested its merchant banking business, FBNQuest Merchant Bank Limited, to EverQuest acquisition LLP.
Intended Use of Funds by FBN Holdings:
The funds raised will be allocated towards recapitalizing First Bank and enhancing innovation and digitization across the group.
Of the total capital, ₦103.12 billion (68.95%) will be invested to bolster the capital adequacy ratio (CAR) of First Bank. Additionally, ₦29.46 billion (19.7%) is earmarked for international expansion, with a cautious approach planned.
Following the trend among tier-1 banks, FBN Holdings is prioritizing technological advancements, with a focus on upgrading core banking applications and enhancing digital banking infrastructure. Approximately ₦14.73 billion (9.85%) will be allocated to improve First Bank’s digital services.
Okonkwo emphasized, “Our customer-centric approach demands seamless transactions from any location. Thus, our tech-driven strategy aims to cater to evolving customer needs.”