Wema Bank Plc to Seek Shareholder’s Approval to Raise 200 Billion to Meet CBN Recapitalisation Directives

Wema Bank Plc, known as Nigeria's fifth oldest bank, reported in a recent notice that it plans to seek approvals from its shareholders for measures like mergers and acquisitions, takeovers, and business combinations to ensure that they comply with the Central Bank of Nigeria recapitalisation directives for a National Licenced Bank. 

Wema Bank also clarified that it will seek approval to raise a total of N200 billion in capital through the issue of ordinary shares, preference shares, convertible and non-convertible notes, bonds, or any other instruments approved by its directors at the group's annual general meeting (AGM), scheduled to be held electronically on May 28, 2024.

Following the updated information about the bank's AGM notice, the bank aims to use this funding to comply with regulatory requirements and advance its business objectives.

This whole development started last year when the CBN Governor, Mr Olayemi Cardoso, the governor of Nigeria's top bank, informed banks of a new capital requirement that would enable the banking system to keep up with Bola Ahmed Tinubu's administration's aim of a $1 trillion economy.

The apex bank informed banks of a new capital raise through a circular dated March 28, 2024. Following the review, the new capital requirements for international banks were increased to N500 billion, the capital requirements for national banks were increased to N200 billion, and the new capital requirements for regional banks were increased to N50 billion. 

However, the CBN excluded banks' reserves, shareholders' funds, and retained earnings from the capital requirement to inject fresh capital into the system.

The CBN said it would start on April 1, 2024, and end on March 31, 2026.

According to the statement, strategies such as rights issues, private placements, and public offerings will be used to accomplish the planned capital raise, contingent upon shareholders' approval.

Wema Bank said, "The Directors are hereby authorized to take and implement such measures as shall be required for the Company to fully comply with the recapitalization directives of the Central Bank of Nigeria (CBN) by way of a merger, business combination, acquisition, takeover, etc., subject to the approval of the relevant regulatory authorities.

"That the Directors be and are at this moment authorized to raise additional capital in the sum of N200,000,000,000.00 (Two Hundred Billion Naira Only) or such other amount that would enable the company to meet the Central Bank of Nigeria recapitalisation directives for a National Licenced bank and achieve its business needs through the issuance of securities comprising any or combination of, ordinary shares, preference share, convertible and/or non-convertible notes, bonds or any other instruments, by way of any of, a public offer, rights issue and or private placement or combination of such methods, in such tranches, series or proportions, at such dates and upon such terms and conditions, as may be determined directors, subject to obtaining requisite approval of the regulatory authorities."

The statement also disclosed that the AGM would present shareholders with special resolutions to consider, including authorizing the board of directors to allocate and issue various types of securities (such as ordinary shares, preference shares, notes, and bonds) to fulfill the proposed capital raise.

Wema Bank stated that if the right issue is undersubscribed, the unsubscribed shares will be offered to interested existing shareholders.

The bank said it may also cancel unsubscribed shares, subject to shareholders' and regulatory consent.