Financial institutions that have started raising capital plan to allocate $1.20bn from the proceeds to invest in cyber defense infrastructure.
This, according to Punchng.com report, was indicated in the offer prospectus of five lenders that have commenced their capital raise, to meet the new capital requirement of the Central Bank of Nigeria.
In late March, the CBN announced new capital requirements for the banks operating in the country.
The apex bank directed commercial banks with international authorisation to increase their capital base to N500bn, national banks to N200bn and those with regional authorisation were expected to achieve a N50bn capital floor.
CBN gave the financial institutions two years to achieve the target and three options: raising additional capital, mergers and acquisitions, and licence upgrade or downgrades.
According to PwC, there is a significant capital shortfall of N4.2tn across all licence categories, as much as between 35 per cent and per cent of the new minimum capital.
Punch’s analysis of the offering documents showed that Guaranty Trust Holding Company had budgeted the highest amount to be invested in technology.
GTCO offered nine billion ordinary shares of 50 each at N44.50 per share with the intent to raise about N400.50bn.
Of its net proceeds of N392.49bn, the holding company said 94.3 per cent of the proceeds (N370bn) would go towards the recapitalisation of its banking subsidiary, GTBank, while the remaining 5.7 per cent would be on the acquisition of pension fund administration and asset management businesses.
The offer document revealed that GTBank intends to spend N98.50bn (26.6 per cent) of the net offer proceeds on technology infrastructure upgrades, with a majority of it going towards, “Core banking application implementation, associated hardware infrastructure, network architecture, and ancillary costs related to optimisation of data centre/disaster recovery centre.”
Meanwhile, information security & fraud prevention and detection software get about N15bn (4.1 per cent) of the net proceeds.
Access Holdings indicated that 20 per cent of the net proceeds from its rights offer (N343.09bn) would be invested in IT infrastructure upgrades and development.
About N41.17bn would be invested in network infrastructure and N27.48bn in cyber defense capabilities, bringing the total spend on IT to N68.62bn.
A significant portion of the net proceeds would go towards local and international business expansion (N223.01bn).
Zenith Bank Plc said that the proceeds of its offering would “enable the bank to conclude the overhaul of its information technology infrastructure and provide additional working capital to support its expanding operations and enable the Bank to take maximum advantage of emerging opportunities”.
For investment in technology, Zenith Bank noted that it would spend about 20 per cent of the net proceeds, N99.27bn, which amounts to N19.85bn.
A breakdown showed that Zenith Bank planned to spend N8.93bn on computer hardware/servers, N3.97bn each on software licences, registration and network infrastructure upgrades and another N2.98bn on cybersecurity architecture/software.
Fidelity Bank, which has closed its offering, planned to invest about N19.01bn in IT infrastructure, which is about 20 per cent of the net proceeds from the offering.
The bank, which raised about N127bn in its combined offer, said that it intended to invest N9.03bn in cybersecurity capabilities, N7.60bn in software licences and hardware and N2.38bn as additional investment in its network infrastructure.
Of the five banks reviewed, FCMB Group has the least amount budgeted for technology at N16.22bn (15 per cent of the net proceeds).
About N11bn would go to upgrade its information technology infrastructure and N5.23bn towards investment in cybersecurity capabilities.
Fresh budgets for IT infrastructure are being allocated amid a recent surge in attacks on banks’ technology infrastructure, resulting in financial losses and subsequent legal actions.
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