CBN Recapitalisation: Two National Banks Enter Secret Merger Talks to Beat Deadline
- Two national banks have commenced merger talks ahead of the recapitalisation target set by the Central Bank of Nigeria (CBN)
- The banks reportedly commenced the merger talks because they are unwilling to begin public offers
- Already, five Nigerian banks have crossed the recapitalisation hurdle, with another six facing a N965 billion funding gap
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Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
As the recapitalisation deadline set by the Central Bank of Nigeria (CBN) approaches, two national banks are reportedly said to have begun merger talks to meet the regulatory deadline and remain competitive.
More and more banks are facing intense heat, with six banks having about N965 billion funding gap, a prior report by Legit.ng disclosed.
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Five banks cross the hurdle, six scramble
Already, five banks have scaled the recapitalisation hurdle and will proceed with their operations.
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First Bank, FCMB, 4 others seek N731 billion to meet CBN recapitalisation as deadline nears
The banks include Access Bank, Zenith Bank, Lotus Bank, Ecobank, and Stanbic IBTC Bank.
Two national banks in discreet merger talks
However, The Sun newspaper quotes sources as saying that the two banks, which both hold a national banking licence, have been discreet about the merger talks since the beginning of the second quarter.
The report disclosed that the move would create a stronger mid-tier institution to meet CBN’s new minimum capital of N200 billion for national banks, representing a significant leap from the previous ceiling of N25 billion.
The CBN order gave the banks a 24-month window to recapitalise, with analysts saying that several banks may merge and others have their licences downgraded.
CBN target: Why recapitalise?
They disclose that the recapitalisation is part of CBN’s larger effort to build a more resilient and globally competitive banking industry to finance Nigeria $1 trillion GDP target by 2030.
However, several smaller banks face challenges in meeting the new threshold and face mergers and acquisitions (M&As).
Osas Igho, a financial analyst, disclosed that the Nigerian banking industry will be revolutionised at the end of the exercise.
Experts predict a stronger banking sector
“At the end of the day, we will have a strong, robust, and globally competitive banking industry. However, as the deadline nears and more banks are battling to raise the required capital, there may be more mergers and acquisitions. It is too early to tell which banks will merge or be acquired,” he said.
While some tier-1 and tier-2 banks are said to have hit the target, several small players remain far off target.
According to reports, the two banks, which are in secret merger talks, are reluctant to pursue public offers due to high regulatory costs, tough Securities and Exchange Commission (SEC) disclosure rules and investor apathy.
Source: Twitter
The institutions are said to be assessing synergies, board structure, and shareholder alignment before any formal disclosure.
Stanbic IBTC Bank hits CBN's recapitalisation target
Legit.ng earlier reported that the number of Nigerian banks that have hit the recapitalisation target set by the Central Bank of Nigeria (CBN) has swollen to about five.
The development comes as Stanbic IBTC Bank disclosed that it has met the apex bank’s recapitalisation requirements after a successful conclusion of rights issues of the parent company, which raised N148.7 billion, with a 21.9% oversubscription rate to achieve N181.4 billion.
Stanbic IBTC Bank holds a national banking licence from the CBN and has a minimum recapitalisation target of N200 billion.
Source: Legit.ng
