Access Holdings PLC Announces $1.5bn Capital Raising Programme in Response to Nigeria's New Capital Requirements for Banks

Access Holdings Plc has announced plans to establish a $1.5 billion capital raising programme in response to the Central Bank of Nigeria's (CBN) new policy requiring banks to increase their minimum capital. The capital raising programme will aim to enhance the financial strength of the group and may involve the issuance of various financial instruments such as ordinary shares, preference shares, convertible debt, bonds, or other funding instruments. Access Holdings expects to raise up to N365 billion ($1.1 billion) specifically through a rights issue of ordinary shares, with the proceeds to be used for ongoing working capital needs and organic growth funding.

related news : CBN issues New Minimum Capital Base for commercial Banks Nigeria.

The move to increase capital requirements for Nigerian banks has received mixed reactions. Some financial market analysts, economists, and bankers welcome the recapitalisation exercise, seeing it as a necessary step to strengthen the financial institutions. They predict that the exercise will lead to mergers and acquisitions within the banking sector. However, some analysts fault the exclusion of retained earnings from the regulatory capital composition, arguing that it would prevent banks from tapping into their reserves to meet the new requirements.

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The CBN has stated that it will closely monitor the recapitalisation exercise to prevent the influx of illicit financing into the sector. It will collaborate with law enforcement agencies to enforce anti-money laundering regulations and conduct fit and proper checks for shareholders and directors. The CBN will also enhance its monitoring and supervisory oversight over the banks and ensure the protection of depositors' interests.

Overall, the increase in capital requirements for Nigerian banks is seen as a positive step towards strengthening the banking sector. While there are concerns about the exclusion of retained earnings, analysts believe that the exercise will lead to safer and more resilient banks in line with international standards.