Wednesday, 26 May 2010
Wema Bank said on Tuesday that it planned to raise N49bn through a special placement with foreign and local investors and was confident it could recapitalise before the deadline given to it by the Central Bank of Nigeria.
Wema Bank is one of the nine banks bailed out last year in a N620bn CBN rescue because their weak capital bases posed a systemic risk. It was given until the end of June, 2010 to recapitalise.The bank said in a statement on Tuesday that it was optimistic that it would recapitalise within the timeframe set by the apex bank.
The bank said N34bn of the planned capital raising would be with identified foreign investors and a further N15bn with selected strategic local investors.It said it was also close to recovering N10bn in bad loans and would recover a further N10bn by discounting some non-performing assets with the proposed Asset Management Corporation of Nigeria.
AMCON, which is awaiting Presidential assent having passed through the National Assembly, aims to buy up bad bank loans in exchange for government bonds in order to free up banks‘ balance sheets and get them lending.Wema said a further N2bn of provisioned loans would be refinanced through a subsidised CBN fund.
The bank, which swung to a N795m pre-tax profit in the first quarter from a N2bn loss a year earlier, also said it would apply for a regional banking licence under the new CBN guidelines.The Governor of the CBN, Mr. Lamido Sanusi, has said he intended to do away with the universal banking model and separate banks‘ core lending business from more speculative capital market activities, such as stockbroking and asset management.
Different capital requirements will be introduced for banks depending on the activities they want to pursue.Regional banks will be required to have a minimum capital of N15bn and must operate in between five and 10 states within the country.
Financial institutions operating across all of the country‘s 36 states will be required to have a minimum capital of N25bn, while international banks must have N100bn.