FCMB Considers Selling Stakes in Subsidiaries to Meet CBN Capital Requirement

• First City Monument Bank's owners, FCMB Group, could be thinking about lowering their ownership of its subsidiaries
• Proceeds from the transaction could help the lender meet the higher capital requirements if that route is followed
• By March 2026, it hopes to have raised at least half a trillion naira in core capital (not including stock) for its banking operations

Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.

To meet the goal of raising core capital (excluding equity) for its banking business to at least half a trillion naira by March 2026, FCMB Group, the owners of First City Monument Bank, may consider reducing its stake in subsidiaries.

Premium Times reported that Next month, the board of directors will call a meeting to ask shareholders to approve a plan by the lender to sell some of its stakes in subsidiaries to prospective investors in exchange for cash.

If that path is taken, the deal's proceeds might assist the lender in fulfilling the increased capital requirements.

In a statement to the Nigerian Exchange on Thursday, the financial services provider revealed that it operates in a number of areas, including trusteeship, asset management, microlending, and pensions.

The board, at its discretion, will “invest such portions of the proceeds of the divestments into First City Monument Bank Limited, as parts of steps to meet its capital raise objectives,” the statement noted.

Recall that during the first phase of its recapitalization drive, which aimed to raise N150 billion from investors, FCMB Group eventually raise N110.9 billion through a public offering in July.

More options to raise funds

It currently plans to increase the capital to N340 billion, and it hopes to do so by taking into account a number of possibilities, including the issuance of debt and equity market instruments in addition to the partial sale of stakes in subsidiaries.

The bank holding company will use the global capital market if necessary to satisfy the regulator's request.

The lenders with international banking permits—including FCMB—are subject to the strictest recapitalization requirements.

The FCMB Group, like the big five banks—FBN Holdings, UBA, GTCO, Access Holdings, and Zenith—has an international banking permit. This suggests that FCMB must raise its core capital to at least N500 billion.

Banks to raise N1.26tn ahead of recapitalisation deadline

Legit.ng reported that leading banks are set to generate N1.26 trillion in the capital market to comply with the recapitalisation requirements established by the Central Bank of Nigeria (CBN).

It would be recalled that in March 2024, the minimum capital base required by banks operating in Nigeria was reviewed upwards by the CBN.

The CBN had mandated that banks meet the minimum capital requirement within 24 months, starting on April 1, 2024, and ending on March 31, 2026.