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CBN Set to Liquidate 83 Micro Finance Banks

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Alhaji Umaru Ibrahim, managing director of the Nigeria Deposit Insurance Corporation, said yesterday that the Central Bank of Nigeria has approved the liquidation of 83 licensed micro finance banks.

Ibrahim stated this when he appeared before the Senate Committee on Banking and Currency to defend his agency’s 2014 budget.

The NDIC boss said that it was discovered that some of the micro finance banks “existed only on paper while some are used to defraud Nigerians.”

He further explained that there were up to 900 micro finance banks operating in the country out of which 83 of them have been listed for liquidation.

Ibrahim said the NDIC was already working towards determining the number of depositors and how much each deposited in the banks in order to pay them.

He said, “Some assets of the banks will also be sold. There is no doubt that the operations of some of the micro finance banks have become epileptic.”

The NDIC boss added that N105 billion was provided for in the 2014 budget to pay off depositors of liquidated banks.

He said, “Funding gap is what we do to prepare for the rainy day. We hope and pray that the rainy day does not come but any insurance should prepare for the rainy day. As we speak, no bank benefited from the fund in 2013.”

Ibrahim lamented what he called “the dollarisation’ of the economy by speculators” and assured members of the public that the issue was already being looked into by the CBN to ensure that it does not affect the economy.

He also told the committee that NDIC initiated rebranding operations to ensure better service.

He said that after operating for 20 years, the NDIC had decided that it was time to rebrand for total reorientation.

He also hinted on plans to regulate mobile banking in the country to avoid any form of fraudulent practice by operators either in the banking or telecommunications sector.

He said, “In 2013, we maintained confidence and stability of the banking system through a continuous effective supervision and regulation of the system. We have also try to pay depositors of institutions that had been liquidated.

“We have stepped up awareness and campaigns about our activities to make sure that members of the public put up claims of their locked up deposits in liquidated financial institutions. We appointed some banks as agents with the assistance of our various zonal offices that we had established in various parts of the country.”

The NDIC boss added that, his plan for the current fiscal year was to continue to protect depositors’ funds and to enhance the supervision because the agency’s act did not cover such transactions at the moment.

He also pledged to promote financial literacy and ensure consumer protection so as to make sure that the agency enhances financial inclusion so that millions of Nigerians that do not have access to banks for any form of financial system or outlet were assisted in various ways.

He said, “We are partnering with the Central Bank of Nigeria to discuss the ways and means of ensuring depositors of mobile banks and depositors of mobile phone system.

“Mobile banks are emerging and seven banks had been licensed by the CBN to get involved in mobile banking and there are 11 non-banking telecommunications related institutions that had been licensed to offer mobile money service.

“This needs to be regulated. The depositors of the institutions offering mobile banking needed to be identified and protected. The whole essence of this is that if we have millions of such people sending and collecting money through mobile banking system.

“We want to ensure that in event of any crisis, they are covered. Unless they have that assurance of being covered, you don’t expect them to accept to participate in this revolutionary project that is coming on board.”

“On the issue of a repeal of the Fiscal Responsibility Act, it is not a bad idea to take a second look at it. We will welcome a review of the act”

 


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Fidelity Bank Eyes Oversubscription to N127.1bn Combined Offers

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Against the background of groundswell of supports and enthusiasm for the bank’s ongoing offers, Fidelity Bank Plc has started preparations to allow the bank absorb oversubscriptions.

With investors rallying behind the bank’s N127.1 billion combined rights and public offer, market pundits had indicated that the bank would raise more than initial size of the combined offer.

Reports have shown high subscription levels for the offers early weeks of the offer period, riding on the back of acceptances by existing shareholders and demand by the general investing public.

Fidelity Bank is offering a rights issue of 3.2 billion ordinary shares of 50 kobo each at N9.25 per share. The bank is also simultaneously offering 10 billion ordinary shares of 50 kobo each to the general investing public at N9.75 per share.

The acceptance and application lists for the rights issue and public offer, which opened on Thursday, June 20, 2024, are scheduled to close on Monday, July 29, 2024. The rights issue has been pre-allotted on the basis of one new ordinary share for every 10 existing ordinary shares held as at the close of business on Friday, January 05, 2024.

With promising feedbacks from receiving agents and as shareholders, investors, experts and other stakeholders continue to rate the combined offers high, the board of Fidelity Bank has called an extraordinary general meeting (EGM) to enable the bank to absorb expected surplus funds.

Shareholders are scheduled to meet later this month to authorise the company “to accept surplus monies arising from potential oversubscription of the combined offer in such proportion as may be determined by the board of directors, subject to the company’s issued share capital and obtaining relevant regulatory approvals”.

Shareholders are also expected to increase the issued share capital of the company from N22.6 billion divided into 45.2 billion ordinary shares of 50 Kobo each to N26.70 billion through the creation of up to 8.2 billion in order to “accommodate potential oversubscription of the combined offer in the proportion of 5.0 billion additional ordinary shares under the public offer and 3.2 billion additional ordinary shares under the rights issue”.

The meeting will also mandate the board to take all necessary actions in line with the absorption of the oversubscription funds.

The board of the bank reiterated its commitment to retain the bank’s international banking license by meeting the new capital requirement within the regulatory timeframe.

According to the board, the resolutions proposed for shareholders’ approval at the upcoming EGM of July 26, 2024, are to enable acceptance of potential oversubscription from the combined offer, subject to relevant regulatory approvals.

The board pointed out that with the resolutions to accept oversubscription, the bank will be in stronger position to take advantage of emerging business opportunities and secure long-term profitability and competitive advantage, while ensuring increased shareholder value.

The net proceeds of the offer would be applied to investments in information technology infrastructure, business and regional expansion, and product distribution channels.

“The company is on a strong growth trajectory and requires additional capital for improved profitability, expansion- domestic and international, and enhancement of its digital capabilities.

“Continuing advances in technology, the rapid evolution of the business of banking, and changes in the operating landscape also make it imperative that the bank remains agile, adaptable and properly positioned to respond appropriately to developments, whilst remaining a competitive and forward-looking institution,” the board stated.

Directors of the bank assured that notwithstanding the continued rapid evolution of the banking industry, Fidelity Bank has been placed on foundation for strong and sustainable growth.

Fidelity Bank Plc’s combined N127.1 billion rights and public offer had struck early success as enthusiastic shareholders mobilise to pick their pre-allotted shares and buy more stakes in Nigeria’s most-widely owned commercial bank.

Shareholders have said they would pick their rights and buy more shares from the public offer in a massive show of support and positioning in the bank. Fidelity Bank had delivered an average annual capital gain of more than 100 per cent over the past five years and ranked among the elite stocks with the highest corporate governance rating at the Nigerian stock market.

In separate interviews, shareholders across Nigeria’s leading shareholders’ associations, said the pricing of the highly discounted rights issue and public offer, the operational growth of the bank over the years, dividend records and capital gains were attractions to buy more stakes in the bank. Fidelity Bank is one of the few companies that pay dividends twice a year at the stock market.

They envisioned that a post-recapitalisation Fidelity Bank would deliver higher returns and continue to be a leading preserver of values for shareholders’ wealth.

The shareholders, who spoke through their leaders, said recapitalisation has offered good opportunity to the investing public to buy into good banking stocks at reduced prices, noting that banks are the most influential stocks at the Nigerian market. Subscribers to primary market issues are exempted from paying transaction costs, unlike direct purchase through the secondary market.

Shareholders, under the auspices of Independent Shareholders Association of Nigeria (ISAN), Ibadan Zone Shareholders Association (IBZA), Association for the Advancement of Rights of Nigerian Shareholders (AARNS), Pragmatic Shareholders Association of Nigeria and Progressive Shareholders Association of Nigeria among others, said they were picking up their rights and mobilising supports for the bank.

The general shareholders’ endorsements represent a major boost for Fidelity Bank, which has the most diversified retail shareholders’ base among Nigerian banks.

With nearly 400,000 shareholders, no single shareholder held up to 5.0 per cent of the issued share capital of the bank. Five per cent and above are considered the material shareholding under extant laws and market regulations.

Rights issue is traditionally pre-allotted on the basis of existing shareholdings and its success, most often, depend largely on the satisfaction and enthusiasm of existing shareholders.

Fidelity Bank appears to be riding high on its highly diversified shareholding base with its popularity showing across all cadres of investors in the market. The shareholders’ comments came on the heels of similar positive comments by investment experts and capital market stakeholders.

The combined rights and public offers had opened to a rousing support from the investing public as key capital market stakeholders recalled the symbolic importance of Fidelity Bank’s impressive growths and investor-friendly disposition over the years.

From the Nigerian Exchange (NGX) to stockbrokers, investors and customers; the N127.1 billion combined rights and public offer received unreserved recommendations, with industry thought leaders citing the performance of Fidelity Bank in its core banking operations and as a quoted company at the stock market.

They said Fidelity Bank’s N127.1 billion combined rights and public offer was the right way for the nation’s banking recapitalisation exercise to start as the bank, which has the highest corporate governance rating and an average annual capital gain of more than 100 per cent at the stock market, has strong appeal to the investing public.

The Doyen of Stockbrokers, the oldest practicing stockbroker, Alhaji Rasheed Yussuff, said Fidelity Bank has good records going for it with its history of impressive growth and profitability and dividend payments.


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FCMB Unit CEO Calls for Innovation and Resilience Amid Economic Challenges

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At the BusinessDay CEO Forum, Chukwuma Nwanze, MD/CEO of Credit Direct Finance Company Limited (Credit Direct), FCMB Group’s consumer finance arm, emphasized the critical role of innovation and resilience for Nigerian businesses navigating the current economic challenges. Highlighting the transformative potential of technology and digital transformation, he stressed its importance in adapting to evolving consumer needs and ensuring sustained growth.

Chux Nwanze -CEO Credit Direct – A member of FCMB Group

During a panel discussion on “Leadership and Partnership: Driving Value in a Challenging Economy,” Nwanze emphasized the need for proactive strategies to address market volatility. He offered insights into how businesses can foster innovation and achieve sustainable reinvention.

Nwanze pointed to Credit Direct’s success as Nigeria’s leading FinTech and consumer finance company, attributing its growth to using AI-driven credit decisioning in its loan origination process and digital channels for nationwide expansion. “At Credit Direct, we are able to optimize and scale significantly by using automated credit decisioning in underwriting loans and leveraging digital channels to reach all parts of the country,” he stated. “We consistently innovate to build products that solve our customers’ problems.”

He urged business leaders to embrace emerging technologies and understand evolving consumer behaviours to meet demands and remain competitive. “Leaders must extend their vision beyond traditional boundaries and continuously adapt to changes in the environment,” Nwanze emphasized.

The panel session that featured the Credit Direct boss also had other distinguished business leaders, including Yomi Ademola, Chairman of West Africa Rendeavour and Managing Director, Alaro City; Khilian Khanoba, Senior Partner, Kreston Pedabo; and Dr. Ayotunde Coker, CEO, Open Access Data Centres Limited, who collectively shared profound insights on the subject of driving value in a challenging economy.

Dr Coker particularly stressed the need for broadband development to drive economic growth while also dwelling on the importance of data in making economic decisions. The panelists, including Nwanze, aligned on how these elements are requisite for economic development.

The conference also featured Central Bank of Nigeria Governor Olayemi Cardoso, who participated in a fireside chat titled “Leadership in Tough Economic Times.” Cardoso said: “It is essential for businesses to build genuine credibility. Part of the current focus of the Central Bank of Nigeria is to develop a stronger and more resilient banking system.”

The BusinessDay CEO Forum drew CEOs from Nigeria’s leading companies, including the Deputy Lagos State Governor, Femi Hamzat, and former Governor of the Bank of Kenya, Patrick Ngugi Njoroge. The annual gathering, organized in collaboration with PricewaterhouseCoopers (PwC), is a platform for top executives and government officials to discuss critical economic issues and shape the nation’s economic landscape.


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NDIC Harps on Collaboration to Check Insider Abuses, Financial Malpractices

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The Nigeria Deposit Insurance Corporation, NDIC, urged for more collaboration with enforcement agencies to tackle the menace of insider abuses and malpractices in financial institutions.

Bello Hassan, Managing Director/Chief Executive Officer, NDIC, made this call while speaking at the capacity building workshop for law enforcement agencies in Lagos.

Speaking on the theme of the workshop, “Effective Collaboration as a strategy in the fight against insider abuses and financial malpractices in Banks and Other Financial Institutions in Nigeria,”

Hassan said that the menace of insider abuses and financial malpractices is   a major cause of bank failure, which if not tackled is   capable of eroding public confidence in our banking system.

Stating that the aim of the workshop is to build on current collaborative efforts in the fight against insider abuse and financial malpractices, the NDIC boss said: “In line with similar initiatives by the Corporation, this workshop aims to complement the efforts of the Inter-Agency Task Force on the Implementation of Failed Banks Act, and I want to believe that all the Agencies involved as members of the Task Force are being represented at this workshop.

The Corporation, whilst bearing in mind the positive impact of such collaboration will continue to strive at enhancing the synergy between all of us in the area of law enforcement relating to investigation and prosecution of financial malpractices.

“Please permit me to use this forum to appeal to the members of the Task Force not to relent on your oars but to execute the given mandate diligently thereby achieving the objectives of establishing the Task Force.

“Through our collaborative efforts, I am aware that fourteen (14) prosecution cases are on-going at various courts, eighteen (18) on-going investigation with FMIU, eight (8) with EFCC and nine (9) concluded investigations with Federal Ministry of Justice for advice and prosecution. This is an indication that we are on the right course.”

Consequently, Hassan urged the gathering of law enforcement agencies not relent on their efforts adding that the NDIC is aware of the challenges of investigating and prosecuting financial malpractices and bank fraud cases and will give its unflinching support at all times.


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