FBN Holdings, the parent company of Nigeria’s oldest bank, flagged off its ₦150 billion rights issue on Wednesday. While the Central Bank increased capital requirements for the country’s biggest banks tenfold in March 2024, Nnamdi Okonkwo, FBN Holdings’ GMD, said the bank’s capital raise plan commenced in 2023.
“We knew the kind of firepower we needed, and we decided to do ₦150 billion issue. Subsequently, at our next AGM, we will apply to raise another ₦350 billion,” Okonkwo said in a presentation on the Nigeria Exchange Limited (NGX) floor.
The bank will sell 5,982,548,799 shares of 50 kobo each to its shareholders at ₦25.00 per share. The rights issue will close on December 12, 2024.
“We have ₦270 billion and the CBN says, go up to ₦500 billion. We are currently doing ₦150 billion and at our next AGM, we’ll be asking for shareholders’ approval to do another ₦300 billion when we are done, we will then have ₦730 billion in capital. That means we’ll be ₦230 billion higher than the regulator’s stipulated capital,” Okonkwo said.
FBN Holdings is the fourth tier-1 banking group to launch a capital raise to meet capital requirements, joining Guaranty Trust Holding Company GTCO, Access Holdings, and Zenith Bank Plc. Five of Nigeria’s largest banks raised a total of ₦1.26 trillion, Bloomberg reported.
While its capital raise comes amid rising inflation, FBN Holdings argues that its diversified portfolio with several subsidiaries makes a strong case for shareholders. The bank operates the largest agent banking network in Nigeria and accounts for 20% market share.
“It isn’t an accident that we are as diversified as we are, and that’s why, from time to time, we query our portfolio and make a decision about what to strengthen, what to divest from, and what to do less of. So leveraging our diversified businesses and shared resources to do more with less,” Okonkwo said.
FBN Holdings reported a profit before tax of ₦1610.9 billion in the nine months to September 2024, representing a 128% jump compared to the previous year. In September 2024, the company sold its merchant banking business FBNQuest Merchant Bank Limited to EverQuest acquisition LLP.
What will FBN Holdings use the money for?
“We’ll be recapitalizing our flagship, First Bank, with a certain portion of the money, and deploy the rest for innovation and digitization across our franchise.”
FBN Holdings will invest ₦103.12 billion (68.95%) to improve the capital adequacy ratio (CAR) of its banking subsidiary, First Bank. While it plans to invest ₦29.46 billion (19.7% of the proceeds) on international expansion, it will take a “step-by-step approach.”
Like its tier-1 counterparts, FBN Holdings is rethinking its technology. Since the second half of 2024, Nigeria’s biggest banks have upgraded their core banking applications.
FBN Holdings will invest 9.85% of the capital raised—-₦14.73 billion—-to upgrade First Bank’s digital banking infrastructure and automation systems.
“We are tech-led because customers want to do transactions from the comfort of their car, house, and wherever, without issues.”
