BY MYKE UZENDU, ABUJA
As Banks adopt all forms of financial strategies to meet up with the new minimum capital base of NGN500 billion (US$402.5 million) for commercial banks with international licence and NGN200 billion for commercial banks with national licence, Managing Director of Afrinvest, Ayodeji Ebo, pointed out that banks will need foreign investors to achieve this target.
Ebo made the disclosure over the weekend during the Nairametrics industry outlook webinar with the theme, ‘Banking Public Offers: Buy, Sell, or Hold’.
Ebo insisted that the success of the current public offer adopted by most banks to raise capital will only result to the desired impact if foreign investors key into the opportunity.
He noted that many investors will be attracted to the offers due to the narrow gap between the public offer prices and the market prices.
He said, “Foreign investors will play a major role in the success of the current public offers.
“They will also be investors that banks would have to get to ensure that the offers and recapitalization are successful.
“The banks have long-term prospects and it’s an opportunity for these investors to want to key in,” Ebo said.
Ebo however emphasized that prospective investors should carefully consider several factors before investing in a bank’s public offer.
He explained that simply purchasing shares because they appear attractive is insufficient; he advised investors to conduct thorough due diligence.
Due diligence according to him, includes assessing the bank’s current performance, reviewing its past dividend yields, and other critical metrics.
Ebo also highlighted the importance of continuously monitoring the bank’s quarterly performance after investing to evaluate how the bank is progressing.
“Before you invest in a bank public offer, look out for their last dividend yields.
“Before buying a share, look at how well the bank is being run.
“Also, once you have invested in a share, you need to also monitor quarterly performance,” Ebo added.
Recall that the Central Bank of Nigeria (CBN) recently rolled out recapitalization programme for commercial banks, aimed at increasing the capital base of Nigerian banks.
The exercise is to enhance banks’ capacity to manage higher risks, boost liquidity, and expand their ability to absorb losses.
Banks are expected to collectively raise approximately $4 billion in total capital by the end of 2024. They are also at liberty to upgrade or downgrade their license, or to pursue mergers and acquisitions with other banks.
The CBN gave a 24-month deadline for banks to secure the necessary funds, with the policy taking full effect from April 1, 2026.