A persistent internal crisis plaguing Nigeria’s oldest financial institution, FBN Holdings for the past two years may affect the prospect of the company raising fresh capital in the ongoing recapitalisation exercise by the Central Bank of Nigeria (CBN), analysts have said. The battle, analysts said, may not be in the best interest of its banking subsidiary, FirstBank, which is expected to raise its capital for international banking licence authorisation.The regulator set the new capital base for commercial banks with international licences at N500 billion (up from N50 billion, or $36.5 million) while the requirement for national and regional lenders went up to N200 billion and N50 billion, respectively (from N25 billion and N10 billion). Non-interest lenders’ capital was raised to N20 billion, and N10 billion for regional licences (from five billion naira). Options for meeting the requirements include injecting fresh capital through private placements, rights issues and/ or offers for subscription; mergers and acquisitions; and/or upgrades or downgrades of licence authorisation. The timeline is between April 1, 2024 and March 31, 2026.
A Lagos Federal High Court halted FBN Holdings’ 12th AGM, initially scheduled for August 22, at the request of shareholder, Tohir Folorunsho Ismaila, the latest of a growing list of shareholders standing in the way of the bank’s crucial annual meeting.
The virtual meeting, which was postponed until September 3, according to a notice by the bank on the NGX, was supposed to be the place to get shareholders’ approval for an N350 billion capital raise in the form of a public offering, rights issue or private placement. The bank had in April announced plans to raise capital through the issuance of shares via a public offering, private placement or rights issue in the Nigerian or international capital markets. Analysts believe that these multiple court cases, which have cast a shadow on its AGMs, are also capable of derailing the prospects of raising capital for the future of its banking subsidiary, FirstBank.
Shareholders including Olusegun Samuel Onagoruwa, Kujenya Olayiwola Yusuf and Hakeem Lawal-Oluwa, have initiated lawsuits to challenge the legitimacy of the AGMs, citing violations of court orders that prohibited such meetings. Several cases are in various stages of court proceedings, with some adjourned pending appeals and others awaiting judgment.
Reacting to fear by some shareholders on the development, Moses Igbrude, National Coordinator of the Independent Shareholders Association of Nigeria (ISAN), said the fear is not out of place. He added that those who are in court should remember that the company belongs to all. He stressed that the most important thing to do at a time like this is to be hopeful that an amicable ground should be achieved and the company will move forward.