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Posted By Udokabestluv On January 16th, 2025

…CBN Sanctions Nine Banks For Failing To Dispense Cash Via ATMs

Almost midway into the banking sector re­capitalisation, Wema Bank, Polaris Bank and Keystone Bank are secretly looking for mergers and acquisitions.

Since the Central Bank of Nigeria (CBN) issued guidelines for banking sec­tor recapitalisation in March 2024, some banks have approached the capital market to raise the required capital to keep them as going concern in their preferred status.

This recapitalisation exercise is in­tended to strengthen the banking sector and make Nigerian banks more resilient during economic challenges.

The NGX Invest platform was creat­ed to make public offerings and rights issues more streamlined. This platform has helped banks reach a wider investor base.

Since the banking recapital­isation exercise was announced in March 2024, some banks have been to the equities market to raise capital. Five have concluded, and one is still ongoing.

The banks include: GTCO (N400.5 billion), Access Holdings (N350.1 billion), Zenith Bank (N289.1 billion), Fidelity Bank (N127.1 billion), and FCMB Group (N110.9 billion).

Also, Sterling Financial Hold­ings Company is in the market for N153 billion after finalising a $50 million capital raise through private placement. Among these banks that have raised the target­ed N1.277 trillion, some recorded over-subscriptions.

According to analysts, inves­tors have been trading cautiously in the banking stocks on the back­drop of the recapitalisation policy of the CBN.

Since the CBN announced the banking sector recapitalisation ex­ercise on March 28, 2024, investors in the banking stocks have main­tained cautious trading.

In the new dispensation, com­mercial banks are facing mini­mum capital thresholds of N500 billion for international authori­sation and N200 billion for national authorisation. In contrast, those with regional authorisation are expected to achieve a N50 billion capital floor.

Similarly, non-interest banks with national and regional au­thorisations will need to increase their capital to N20 billion and N10 billion, respectively.

Several banks in Nigeria have raised or are raising capital on the Nigerian Exchange (NGX).

These banks include Zenith Bank, which raised N289.38 billion through a public offer and rights issue; Fidelity Bank, raised N127.10 billion through a public offer and rights issue; and FCMB Group which raised N110.94 billion.

Sterling Financial Holdings Company Plc raised N130.79 bil­lion through private placements and a rights issue, UBA raised capital through a rights issue while Stanbic IBTC Holdings also raised capital through a rights issue.

FBN Holdings is raising capital through a rights issue, Guaranty Trust Holding Company (GTCO) raising N400 billion ($253 million) while Access Holdings Plc raised N351 billion ($222 million).

According to the CBN guide­lines on the recapitalisation exer­cise, there are options of merger and acquisition for those banks that couldn’t raise enough for their desired status.

While speaking on the bank’s plan for recapitalisation, an Exec­utive Director, Wema Bank, Tunde Mabawonku, said the bank is do­ing all it can to ensure it raised cap­ital to N200 billion from its current N68 billion as of September 2024.

Wema Bank then announced plans to raise N150 billion in new capital through a hybrid of rights issuance, public offer and private placement, which will be com­pleted by the end of first quarter of 2025.

Though the bank plans to initiate the push for the required capital by the end of 2024, there are plans for the bank to enter a merg­er talk with a bank that has the same philosophy as Wema Bank.

Speaking on the potential merger discussions, Mabawonku clarified that such talks are prema­ture at this stage.

“M&A conversations might seem a bit premature at this level. Our focus is on capitalising in line with regulatory requirements and continuing to do business,” he said.

As for Polaris Bank, a source close to the management informed Daily Independent that the bank is currently looking at a merger option with the assistance of the CBN considering that the apex bank changed the board recently.

The source added, “The fresh capital raise is something that is being looked at, and we need addi­tional N150 billion capital which I think is not difficult to raise.

“But there are moves in the bank to be a regional bank because our current capital and share pre­mium is about N50 billion. The management is also looking for merger but they have not recorded favourable plans that will keep the name of the bank”.

Like Polaris Bank, Keystone Bank also recently had its board and management changed by the apex bank.

A reliable source in the bank said the bank’s greatest fear is that the playing ground is not condu­cive for the bank even though it is almost close to the required N200 billion needed for national licence authorisations.

There are fears that the bank may not be able to weather the storm and be competitive in the proposed $1 trillion economy be­ing promoted by the President Bola Tinubu-led administration even as a national bank.

“The bank needs a merger that will solidify its foothold in the banking sector”, the source declared.

CBN Sanctions Nine Banks For Failing To Dispense Cash Via ATMs

Meanwhile, in demonstration of zero tolerance to infractions and floating of regulations, the Central Bank of Nigeria (CBN) on Tuesday sanctioned nine Deposit Money Banks (DMBs) for failing to make naira notes available through au­tomated teller machines (ATMs) during the yuletide.

Each bank was fined N150 mil­lion for non-compliance, in line with the CBN’s cash distribution guidelines, following spot checks on their branches.

The enforcement action follows repeated warnings from the CBN to financial institutions to guar­antee seamless cash availability, particularly during periods of high demand.

Communication with the banks revealed that the fines would be debited directly from their ac­counts with the apex bank.

The Acting Director of Corpo­rate Communications at the CBN, Mrs. Hakama Sidi Ali, confirmed the development, noting that “En­suring seamless cash flow is para­mount to maintaining public trust and economic stability.

“The CBN will not hesitate to impose further sanctions on any institution found violating its cash circulation guidelines,” she added.

“The CBN’s investigations and monitoring will continue to scruti­nise cash hoarding and rationing, both at bank branches and by Point-of-Sale (POS) operators.

“The Central Bank is working with security agencies to crack down on illegal cash sales and operational violations, including enforcing POS operators’ daily cumulative withdrawal limit of N1.2 million.”

Governor Olayemi Cardoso in his address at the Annual Bankers’ Dinner of the Chartered Institute of Bankers of Nigeria (CIBN) in November 2024, warned banks to strictly adhere to cash distribution policies or face severe penalties.

He underscored the CBN’s com­mitment to maintaining a robust cash buffer to meet Nigerians’ needs.

“Our focus remains on foster­ing trust, ensuring stability, and guaranteeing seamless cash circu­lation across the financial system,” Cardoso said.

The CBN urged all financial institutions to comply with its guidelines, warning that further violations would attract swift and decisive sanctions.

Source: https://independent.ng/wema-polaris-keystone-banks-shopping-for-mergers-acquisitions/