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Recapitalisation Crisis: Four Banks Face Identity Loss Amid CBN’s New Policy

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3 months ago

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Four major Nigerian banks are grappling with the implications of the Central Bank of Nigeria’s (CBN) stringent recapitalisation policy, potentially leading to the loss of their brand identities.

An investigation revealed that these banks are deeply concerned following the CBN’s recent approval of the acquisition of Unity Bank.

This move is aimed at preventing another bank failure, a scenario the CBN is keen to avoid under its new regulatory regime.

The CBN’s recapitalisation directive, issued on March 28, 2024, requires commercial, merchant, and non-interest banks in Nigeria to significantly strengthen their capital bases by April 1, 2026.

The policy stipulates that banks must meet minimum capital requirements exclusively through paid-up capital and share premiums—essentially, funds directly contributed by shareholders and additional investments exceeding the nominal value of shares.

Under the new guidelines, commercial banks with international licenses must raise their capital base to N500 billion, while national banks are required to meet a threshold of N200 billion.

Banks operating with regional licenses must secure a minimum of N50 billion.

To achieve these targets, the CBN has provided three recapitalisation options: private placements, rights issues or offers for subscription; mergers and acquisitions; and the upgrade or downgrade of license authorisation.

However, adherence to these methods is non-negotiable, as the CBN has made it clear that no alternative approaches will be accepted.

Despite having submitted their recapitalisation plans, the CBN appears unconvinced about the viability of the strategies proposed by the four banks in question.

Sources close to the CBN suggest that these banks might struggle to maintain their current identities, with two banks considering downgrading to regional licenses and the other two facing challenges in retaining their national status.

One of the banks, a longstanding institution with deep roots in the South-West, remains optimistic about retaining its national license.

However, there are growing indications that the bank may be forced to revert to a regional license, a status it held before its elevation to a national license eight years ago.

The bank recently raised N40 billion through a rights issue, bringing its total capital to N55 billion, still short of the required N200 billion.

Another bank has been hit hard by a recent downgrade from Fitch Ratings, which lowered its Long-Term Issuer Default Rating (IDR) to ‘CCC’ from ‘B-‘, and its National Long-Term Rating to ‘B+(nga)’ from ‘BBB(nga)’.

Fitch also downgraded the bank’s Viability Rating (VR) to ‘CCC’ from ‘b-‘, citing concerns about a prolonged breach of the bank’s total capital adequacy ratio (CAR) and uncertainty about the timeline for restoring compliance.

Fitch’s report underscored the precarious situation, noting that the bank’s future hinges on robust internal capital generation and the swift execution of its recapitalisation plan, as agreed upon with the CBN.

The situation is equally dire for a third bank, which was rescued by the CBN in 2022.

The bank is reportedly struggling to find a suitor willing to take over, largely due to concerns about the acquisition of a troubled bridge bank it bought several years ago.

According to sources within the bank, the fear of job losses now outweighs concerns about losing the bank’s identity, with employees anxious about the potential fallout from an impending merger or acquisition.

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Former Governor Ifeanyi Okowa, Spends Second Night In EFCC’s Cell Over N1.3 Trillion Alleged Fraud

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12 hours ago

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November 7, 2024

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Immediate past governor of Delta State, Ifeanyi Okowa, who was arrested and detained by the Economic and Financial Crimes Commission (EFCC) has spent second night in the custody of the anti-graft commission.

 

Okowa is currently being investigated and detained over the alleged diversion of N1.3 trillion.

 

The N1.3 trillion reportedly represents the 13% derivation fund from the federation account between 2015 and 2023.

 

According to sources within the commission, Okowa was invited to the EFCC office in Port Harcourt, Rivers State, where he’s subsequently detained by officials.

 

One of the sources stated, “Okowa was at our Port Harcourt office following an invitation from investigators probing the allegations against him. He was then arrested. The commission is investigating him regarding the N1.3 trillion 13% derivation fund from the federation account between 2015 and 2023.

 

“He is also accused of failing to account for the funds, as well as another N40 billion he allegedly claimed was used to acquire shares in UTM Floating Liquefied Natural Gas. He reportedly bought shares worth N40 billion in one of the country’s major banks, representing an 8% equity stake, to support the offshore LNG project. The funds are alleged to have been misappropriated for other purposes.

Investigators are also examining the alleged diversion of funds by the former governor to acquire estates in Abuja and Asaba, Delta State. He is currently being held at the EFCC facility in Port Harcourt.

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Lagos Government Shuts Down Redeemed Church, Celestial Church, Clubs, Event Centres Over Noise Pollution

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1 day ago

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November 6, 2024

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The Lagos State government has shut down a branch of Pastor E. A. Adeboye’s Redeemed Christian Church of God, a Celestial church, nightclubs and event centres over noise pollution.

The Commissioner for Environment and Water Resources, Tokunbo Wahab, who made this known on Wednesday, said the churches, clubs and event centres were sealed on Tuesday by the Lagos State Environmental Protection Agency (LASEPA) in the Ogudu, Gbagada, Iyana Ejigbo, Isolo, Ajao Estate, Oshodi, Ilasamaja, and Okota areas of the state.

The sealed establishments include: Redeemed Christian Church of God, Celestial Church of God, OMA Nightclub and Lounge, Lounge & Lodging, Bridge Spot Bar, Okiki Event Center and Hall, Emota Paradise Hotel (Phase 2), CF Hotel & Suites, House 27 Hotel & Suites, Echo Spring Hotel, and Smile T Continental Hotel.

The commissioner in a post on X said, “In a bid to address noise pollution and other environmental violations, the Lagos State Environmental Protection Agency (LASEPA) took action yesterday, closing down several establishments across different parts of the state.

“This enforcement drive, focusing on areas like Ogudu, Gbagada, Iyana Ejigbo, Isolo, Ajao Estate, Oshodi, Ilasamaja, and Okota, is part of LASEPA’s continuous efforts to uphold environmental standards and safeguard public health.

“The affected establishments include Honourable Lounge & Lodging, Redeemed Christian Church of God, Celestial Church of God, OMA Nightclub and Lounge, Bridge Spot Bar, Okiki Event Center and Hall, Emota Paradise Hotel (Phase 2), CF Hotel & Suites, House 27 Hotel & Suites, Echo Spring Hotel, and Smile T Continental Hotel.”

 

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Gen. Taoreed Lagbaja: Tinubu directs flags be flown at half-mast

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1 day ago

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November 6, 2024

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President Bola Tinubu has directed that Nigeria’s national flags be flown at half mast for seven days across the country to mourn the passing of the late Chief of Army Staff, Lt. Gen. Taoreed Lagbaja.

The late Army chief, who was appointed by Tinubu on 19 June 2023, was said to have passed away on Tuesday night after a prolonged illness.

The Secretary to the Government of the Federation, George Akume, in a statement on Wednesday by his office Director of Information & Public Relations, Segun Imohiosen, said the president expressed regret over Lagbaja’s death.

Akume said, “President Bola Tinubu has expressed regret following the death of the Chief of Army Staff, Lieutenant General Taoreed Abiodun Lagbaja, after a brief illness at the age of 56.

“The President has directed that national flags be flown at half mast throughout the country for seven days in honour of the departed Army chief.

“He profoundly appreciates the services of the departed to the nation and wishes the family the fortitude to bear the great loss.”

Meanwhile, the Ministers of Defence, Mohammed Badaru and Bello Matawalle, have commiserated with the president, the military, and Lagbaja’s family over his death.

In a statement by the Ministry’s spokesperson, Henshaw Ogubike, the ministers described Lagbaja’s death as a great loss to his family, the Army, and the nation at large.

“The passing on to eternal glory shocked us at the Ministry of Defence, as our working relationship with him was commendable; he exhibited the spirit of camaraderie and cooperation with us in the discharge of our mandate.

“The late Chief of Army Staff contributed significantly to internal security operations across Nigeria and also exhibited a high level of professionalism.

“He will be greatly missed by the family, the military, and the nation, as he served the nation with commitment and dedication,” the statement added.

 

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