Following the conclusion of the share capital raise of Fidelity Bank through a Private Placement of 3.04bn ordinary shares of 50k each, Shareholders of FBNH have also resolved that the company’s issued share capital be increased from N17.95bn of 35.90bn ordinary shares of 50k each to N22.43bn, an addition of 8.97bn ordinary shares. They equally assented to a further capital raise of N150bn through a future Rights Issue. Analysts believe that the move to raise share capital aligns with a call for the banking sector to recapitalize considering the massive reduction in the dollar value of local banks’ capital base.
The current capital reserves of banks are too weak to withstand negative shocks or support the financing of big-ticket transactions. The inability of many banks to even meet the current N25bn issued share capital requirement portends enough systemic threat. Analysts reckon that FBNH’s capital raise could support operational growth and improvement in the Holdco’s future bottom line, while its Right Issue preserves the relative share distribution of existing shareholders. However, the pre-emptive Rights waiver on undersubscribed shares could effectively dilute the holdings of minority shareholders
