Stanbic IBTC Holdings Plc Seeks to Raise N550 Billion to Meet CBN’s Requirements

In its recent report, Stanbic IBTC Holdings Plc announced that the firm plans to raise over N550 billion through a debt issuance program and a rights issue.

The bank, in a notice filed with the Nigerian Exchange Limited on Wednesday.

However, there have been many reports from different banking sectors as they announced their plans to raise additional capital to meet the new capital requirements issued by the CBN weeks back.

In March last month, the apex bank instructed all commercial banks in Nigeria with international authorisation to increase their capital base to N500bn and national banks to N200bn.

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The CBN also said that non-interest banks with national and regional authorisation must increase their capital to N20bn and N10bn, respectively.

At the AGM scheduled for next month, the shareholders of Stanbic IBTC Holdings will discuss and give insight on how they plan to go with the planned fundraising.

The directors of the holding company are seeking shareholder's approval for a special Resolution: (a) 

"That subject to receipt of any required regulatory approvals and pursuant to Article One of the Company's Articles of Association, the Directors be and are hereby authorised to establish a Debt Issuance Programme in an amount of up to N400,000,000,000 or such foreign currency equivalent thereof as the directors may consider appropriate, for the purpose of issuing debt securities (to include senior unsecured or secured, subordinated, convertible, preferred, equity-linked or such other forms of debt obligations) by way of public offering, private placement, additional tier one or tier two capital raising, investments, book building process or any other method, in tranches of such amounts and at such dates, coupon or interest rates and upon such terms and conditions as may be determined by the directors."

The board of Stanbic IBTC Holdings is also seeking authorisation.

"To raise additional equity capital of up to N150,000,000,000 by way of a Rights Issue or offer for subscription on such terms, tranches, conditions, and dates as may be determined by the Directors."

The report stated that shareholders would also vote on increasing the company's issued and paid-up share capital from N6,478,498,581.50 divided into 12,956,997,163 ordinary shares of 50 Kobo each to a maximum of up to N8,250,000,000.00 by creating up to 3,543,002,837 ordinary shares of 50 Kobo each.

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Looking at its audited report for 2023, profit before tax grew to N172.91bn from N100.27bn the previous year, as revenue rose by 48% to N355.17bn.

Also, according to the report, Gross loans and advances granted to customers grew by 69% to N2.09 trillion during the year, with assets under management appreciating by 28% to over N7.2 trillion due to the vibrant returns on assets generated by the fund managers and the acquisition of new assets.

Projecting into the current financial year, the Chief Executive of Stanbic IBTC Holdings, Demola Sogunle, said, 

"The year 2024 is expected to be an improvement on the previous year due to the continuous implementation of the monetary and fiscal policies of the current administration, which is expected to lead to the improvement of the economy.

"Some of these policies have already been implemented in 2023, and the resultant effect should also impact the macro-economic conditions in 2024. Our key focus is to enhance client experience, execute with excellence, and drive sustainable growth and value in the four business segments through partnerships and value creation."

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Back Story

The Central Bank of Nigeria (CBN) has recently modified the minimum capital requirements for Nigerian banks, a crucial step towards improving the strength and stability of the country's banking industry.

This recapitalisation program is expected to impact Nigeria's financial sector significantly. It is designed to address the challenges caused by currency devaluation and bring Nigeria into compliance with international regulatory standards.

The directive by the apex bank required commercial banks with international authorisation to maintain a minimum capital base of N500 billion, as revealed in a statement by Mrs. Hakama Sidi Ali, the acting director of corporate communications at the CBN. Also, banks holding national authorisation must maintain a minimum capital threshold of N200 billion, and banks holding regional licences must maintain a capital base of N50 billion.

What Is Stanbic IBTC Holdings Plc Share Price Today?

Stanbic IBTC Holdings Plc share price as of this reporting today is N42.35