June 6, 2024

Nigeria’s Fidelity Bank said on Thursday it would raise up to 127.1 billion naira ($88 million) via a rights issue and a public share offering to comply with a new minimum capital requirement for local lenders introduced by the central bank in March.

The central bank on Tuesday said local lenders have started submitting plans to meet its new minimum capital requirements which will strengthen the financial system and support economic growth.

Commercial banks with international authorization must have at least 500 billion naira ($345 million) in capital under the new rule.

More than 20 lenders in Nigeria need to raise extra capital within two years to meet the new threshold.

Fidelity said the share sale, which will start on June 20, will end in July and that its shareholders approved the capital raising plan in August last year.

Proceeds of the offer will be invested in online infrastructure, business and regional expansion, and product distribution channels, it said.

Three of Nigeria’s top tier lenders, Guaranty Trust Holding Plc, Access Holding and FBN Holdings, have announced capital raising plans in recent months.

The central bank has said lenders need extra buffers to weather shocks, support the economy and boost growth, especially after two large devaluations in the local naira currency since June last year.

High inflation and low growth have plagued the economy for a decade and government measures to boost growth have stoked price rises, prompted interest rate hikes and worsened a cost of living crisis.

REUTERS