Nigerian financial services group Access Holdings Plc has revealed plans to raise $1.5 billion to bolster its capital base.
This announcement comes at a time when the Central Bank of Nigeria (CBN) directs banks to increase their minimum capital requirements.
Access Holdings will employ a diversified strategy to raise the capital. The company will issue various financial instruments such as ordinary shares, preference shares, and bonds. Additionally, Access Bank will conduct a rights issue to existing shareholders, targeting N365 billion.
The capital raised will address Access Holdings’ ongoing working capital needs and fund organic growth initiatives across its banking and non-banking subsidiaries. This capital injection aims to solidify the company’s financial position and support future expansion.
The capital raised by Access Holdings aligns with the CBN’s directive to strengthen the Nigerian banking sector. The increased minimum capital requirements aim to create a more sustainable and resilient banking system.
The capital is also expected to have a positive ripple effect on the Nigerian capital market. As banks seek funds through public offerings and rights issues, activity in the capital market is anticipated to increase.
The Senate Committee on Capital Market and Institutions has expressed support for the CBN’s bank recapitalization plan. The Committee views it as a necessary step to create a safer, sounder, and more stable banking system.
The new capital requirements are seen as justified due to the negative impact of naira depreciation on banks’ capital bases over time. The tiered minimum capital requirements also attend to the varying operational scopes of international, national, and regional banks.
Emphasis on fresh capital injection for meeting the minimum capital requirements is expected to drive banks towards the stock market. This could lead to increased market activity, capitalization, and potentially attract foreign direct investment, benefitting the Nigerian economy.
