The Securities and Exchange Commission (SEC) announced that it will soon issue appropriate guidelines to facilitate an efficient capital-raising process for banks eager to increase their capital base, as directed by the Central Bank of Nigeria (CBN) recently.
The SEC added that it is committed to a process that will ensure speed, fairness, and good market conduct. It is collaborating with the CBN and other relevant agencies to ensure a smooth process.
This was disclosed by Lamido A. Yuguda, Director-General of the Securities and Exchange Commission, Nigeria, at the end of the 1st Capital Market Committee meeting (CMC) in 2024.
Yuguda commended the CBN for the recently announced policy on bank recapitalization and noted that the Commission has drawn useful lessons from the previous bank recapitalization exercise.
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“The capital market is strong, efficient, and resilient. Over the past few quarters, some large companies have raised significant financing from the market, signifying the depth and ability of the market to provide such financing. We are confident of the market’s ability to provide the needed funds for banking recapitalization,” Yuguda said.
According to him, “The Commission has drawn useful lessons from the previous bank recapitalization exercise and will very shortly issue appropriate guidelines to facilitate an efficient capital-raising process in the present exercise.”
The CBN last month unveiled new minimum capital requirements for banks, pegging the minimum capital base for commercial banks with international authorization at N500 billion. It pegged the new minimum capital base for commercial banks with national authorization at N200 billion, while the new requirement for those with regional authorization is N50 billion. The new minimum capital for merchant banks would be N50 billion, while the new requirements for non-interest banks with national and regional authorizations are N20 billion and N10 billion, respectively.
A circular signed by the Director, Financial Policy and Regulation Department, Mr. Haruna Mustafa, to all commercial, merchant, and non-interest banks, and promoters of proposed banks emphasized that all banks are required to meet the minimum capital requirement within 24 months, commencing from April 1, 2024, and terminating on March 31, 2026.
To enable them to meet the minimum capital requirements, the CBN urged banks to consider injecting fresh equity capital through private placements, rights issues, and/or offers for subscription; Mergers and Acquisitions (M&As); and/or upgrade or downgrade of license authorization.
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