Amid CBN’s New Capital Requirements, Access Holdings Unveils $1.5bn Capital Raising Programme

Amid the Central Bank of Nigeria’s (CBN) new capital requirements for banks, Access Holdings Plc has announced plans to establish a $1.5 billion (N1.963 trillion based on N1309/$ official rate as at Thursday) capital raising programme or its equivalent.

The move comes as financial market analysts, economists, and bankers welcome the recapitalisation exercise that requires banks to beef up their capital base to N500 billion and N200 billion for commercial banks with international and national authorisation respectively.

The CBN’s policy excludes retained earnings from the regulatory capital composition, prompting Access Holdings to take the first step among its peers by unveiling plans to raise capital.

The programme aims to enhance the Group’s financial strength through the issuance of various financial instruments such as ordinary shares, preference shares, Alternative Tier 1 capital, convertible and/or non-convertible debt, bonds, or other capital and/or funding instruments.

The specifics regarding the tranches, series, proportions, dates, pricing, tenor, and other terms and conditions that may be associated with the programme will be determined by the Board of Directors, contingent upon securing the necessary regulatory approvals.

The Group expects to raise up to N365,000,000,000.00 (Three Hundred and Sixty-Five Billion Naira) specifically via a Rights Issue of ordinary shares.

The proceeds of the proposed Rights Issue would be used to support ongoing working capital needs including organic growth funding for its banking and other non-banking subsidiaries.

Industry experts have contextualised the CBN’s move by recalling the previous capital base adjustment in 2005.

They highlighted the adverse impact of currency depreciation on banks’ capital base in dollar terms, necessitating the recalibration to enhance competitiveness on the global stage.

As banks strive to meet the regulatory standards within the allotted timeline, experts predict strategic shifts in banking operations, including mergers, acquisitions, and regional expansions.