Stanbic IBTC Holdings (Stanbic IBTC), a Lagos-based financial services holding firm founded by Nigerian billionaire Atedo Peterside, is seeking shareholder permission to finance an extra N550 billion ($442.8 million) through a debt issuance program and a rights offering. This comes after the bank’s 2023 performance and a regulatory drive for additional capitalization.
The lender’s intention to increase its capital base follows a strong financial year in 2023. The company’s profit increased by 74% year on year to N140.62 billion ($108.9 million), cementing its position as a leader in Nigeria’s banking sector. The strong success was fueled by rising domestic interest rates and positive foreign exchange movements.
The capital rise is consistent with the Central Bank of Nigeria’s (CBN) recent increase in minimum capital requirements for tier-one banks, which aims to strengthen the financial sector and support President Bola Ahmed Tinubu’s $1 trillion GDP target by 2030.
Subject to regulatory approval, the capital injection plan calls for a debt issuance program of up to N400 billion ($321.68 million) and a further N150 billion ($121.21 billion) to be financed through a rights issue. The news coincides with the approaching 12th Annual General Meeting (AGM), which will take place on May 16, 2024, at the Eko Hotel and Suites on Victoria Island in Lagos.
The capital raise is similar to the circumstance in 2005, when the CBN’s higher minimum capital requirements sparked a wave of mergers and acquisitions (M&A) in Nigeria’s banking sector. Analysts expect similar consolidation activities as banks strive to fulfill the new 24-month limit.
Stanbic IBTC, together with local counterparts Access Holdings Plc, Guaranty Trust Holding Company, and Zenith Bank Plc, plans to raise N550 billion ($442.8 million) in new capital, demonstrating the Nigerian banking sector’s commitment to satisfying new regulatory criteria. The transaction also improves Stanbic IBTC’s position in the country’s growing financial environment.
Stanbic IBTC, a significant Nigerian financial services business with total assets of $4 billion as of December 31, 2023, is one of the Nigerian Exchange’s top 15 most-capitalized corporations. The group was founded in 1989 as an investment bank, and its initial CEO was Atedo Peterside, a well-known figure in Nigerian banking. Peterside, who created Anap Business Jets and the Atedo N.A. Peterside Foundation, now holds a 1.14 percent interest in Stanbic IBTC.
The capital raise by the Lagos-based financial services holding firm would strengthen its financial position and fuel future expansion goals. This proactive response to regulatory changes demonstrates the group’s readiness to overcome problems and capture opportunities in a constantly changing industry.
