The Securities and Exchange Commission has released a framework designed to support the Central Bank of Nigeria’s bank recapitalisation programme.
This framework, published on the SEC website on Friday, aims
to ensure a smooth, transparent, and efficient capital-raising process for
banks and holding companies participating in the programme.
This framework outlines the guidelines and procedures banks
are required to follow to raise capital through rights issuance, private
placements, or other approved methods during the 2024-2026 recapitalisation
period.
On March 29th, the CBN directed an increase of capital base
for Deposit Money Banks to improve productivity, establishing new minimum
capital requirements, with international banks needing to raise their capital
base to N500 billion, national banks to N200 billion, and regional banks to N50
billion.
It urged DMBs to expedite actions to increase their capital
base to strengthen the financial system against potential risk.
The SEC framework is a direct response to the CBN’s recent
directive for banks to bolster their capital base.
“This framework would help to ensure that the capital
raising process is conducted efficiently, transparently, and in a manner that
protects the interests of all stakeholders,” stated the SEC.
It outlines the specific guidelines and procedures that
banks must adhere to when raising capital through various methods, including
rights offerings, private placements, and other approved options during the
2024-2026 programme period.
The SEC acknowledges the rationale behind the CBN’s
directive, highlighting the need to strengthen banks’ asset base and support
economic growth in line with the government’s ambitious target of achieving a
$1 trillion economy by 2030.
It also recognizes the capital market’s crucial role in
facilitating this program by enabling banks to access the necessary funds and
explore various business combinations.
“As the regulatory institution mandated to regulate and
develop the Nigerian capital market, it has the responsibility to ensure a
smooth, transparent, and efficient capital raise process by the banks.”
The framework establishes clear guidelines for banks to
follow, promoting transparency and protecting the interests of all involved
parties.
The commission further outlined a streamlined process for
application submission stressing that applications and supporting documents
must be filed electronically via the dedicated email address,
offerapplications@sec.gov.ng.
The commission will review the submitted materials and
electronically communicate any identified deficiencies to the applicants.
Applicants are expected to address these deficiencies
promptly to avoid delays in the approval process.
Timely completion of the application process is crucial for
banks seeking to raise capital within the designated timeframe.
The framework also outlines the consequences of incomplete
applications.
“Where an application is returned for being incomplete – a
penalty of N1,000,000 and a re-filing fee of N100,000 shall apply,” states the
SEC. These penalties are designed to ensure banks submit complete and accurate
information from the outset.
The SEC through the guidelines encourages banks and
stakeholders to reach out for any clarifications or inquiries through a
dedicated email address, offerapplications@sec.gov.ng.
The Capital Market regulator further clarified that the new
framework builds upon existing rules and regulations. It should be “read in
conjunction with the relevant provisions of the Investment and Securities Act,
2007 and the Commission’s Rules and Regulations.”
Furthermore, the SEC reserves the right to request
additional information as deemed necessary. However, the framework also
streamlines the process by allowing previously submitted documents (e.g.,
Memoranda and Articles of Association) to be referenced in subsequent
transactions, provided no changes have been made.