Major investors and directors are scrambling to increase their stakes in banks as the recapitalisation exercise enters its final and most decisive phase.

Trading reports reviewed by The Nation yesterday showed a high trend of insider dealings across several banks.

Many others are surreptitiously offering shares to major investors as part of buffers for expected consolidation in the banking industry.

As the banking recapitalisation heads to the March 31 deadline stipulated by the Central Bank of Nigeria (CBN), The Nation’s Market Intelligence indicated that currently, banks have more than N400 billion under special placements to major investors.

With a shortened timeline and more than two-quarters of banks yet to meet the new minimum capital requirements, market sources said banks were seeking to undertake “reverse rights issue” in special placement to significant shareholders and related parties.

A major investor in one of the first-generation banks was said to have acquired an additional equity stake to increase the largest and controlling equity stake in the bank to some 17 per cent, in what market pundits saw as a strategic positioning for future special placement.

In another instance, senior executives of a new generation bank were acquiring shares at the secondary market, providing them with the opportunity to increase their holdings in the event of a rights issue.

“It’s natural for the major shareholders to seek to protect themselves from dilution and to increase shareholdings, knowing that post-recapitalisation industry may become more competitive and profitable,” an investment banking source said.

CBN governor, Mr. Olayemi Cardoso, who presented a status report on the recapitalisation exercise, said 16 banks have met their new capital requirements.

He also indicated that 27 other banks were raising funds as the March 31 deadline looms.

In March 2024, the CBN released its circular on review of minimum capital requirement for commercial, merchant and non-interest banks.

The apex bank increased the new minimum capital for commercial banks with international affiliations, otherwise known as mega banks, to N500 billion; commercial banks with national authorization, N200 billion and commercial banks with regional license, N50 billion.

Others included merchant banks, N50 billion; non-interest banks with national license, N20 billion and non-interest banks with regional license will now have N10 billion minimum capital.

The 24-month timeline for compliance ends on March 31.

Under the new minimum capital base, CBN uses a distinctive definition of the new minimum capital base for each category of banks as the addition of share capital and share premium, as against the previous use of shareholders’ funds.

The guidelines for the recapitalisation exercise required banks to subject their new equity funds for capital verification before the clearance of the allotment proposal and release of the funds to the bank for onward completion of the offer process and addition of the new capital to its capital base.

The CBN is the final signatory in a tripartite capital verification committee that included the Securities and Exchange Commission (SEC) and the Nigeria Deposit Insurance Corporation (NDIC).

The committee is saddled with scrutinizing new funds being raised by banks under the ongoing banking sector recapitalisation exercise. (The Nation)