Ecobank Nigeria, a member of the pan-African banking firm Ecobank Transnational Incorporated (ETI) and run by Cameroonian banker Alain Nkontchou, urgently requires $200 million to resolve a substantial deficiency in capital adequacy ratio.
This financial problem is causing the bank to seek an extension from creditors and investigate other options for stabilizing its capital base.
According to a recent Moody’s report, Ecobank Nigeria is under increasing pressure to recover its capital adequacy ratio in order to meet international lending norms.
Currently, the bank is demanding a six-month extension from creditors for a $300 million bond due in 2026. This extension is critical for Ecobank Nigeria to raise $200 million and increase its capital adequacy ratio over the statutory 10% level. Failure to do so may result in higher interest rates or requests for early repayment from creditors, further stressing the bank’s resources.
Ecobank Nigeria’s financial woes are placing pressure on its parent business, Ecobank Transnational Incorporated (ETI), which is based in Lomé, Togo.
If the Nigerian subsidiary is unable to secure the requisite funds, or if creditors decide to impose harsh contract requirements, ETI may be forced to step in and infuse capital. Such an intervention would pose a liquidity difficulty for ETI, especially given the current tight and competitive global financial climate.
Despite good performances in West, Central, and Southern Africa, Ecobank Transnational Incorporated continues to suffer financial issues, particularly in its Nigerian operations. The bank has numerous looming debt maturities, including a $500 million Eurobond that will be repaid in April 2024 with long-term loans from development finance institutions.
Additionally, a portion of a $250 million bridging loan secured in March 2024 is required to be repaid over the next 12 months.
These financial obligations increase the urgency for Ecobank Nigeria to reach an arrangement with its creditors and find partners willing to inject the required $200 million over the next six months.
However, the current capital ratio breach may put potential investors off, making negotiations for a capital infusion difficult.
