FBN Holdings Launches ₦150 Billion Rights Issue, Plans Further ₦300 Billion Capital Raise

In a move taken in order to meet Nigeria’s recently updated capital requirements, FBN Holdings, the parent company of First Bank, has officially launched a ₦150 billion rights issue. The rights issue, which opened on November 6, 2024, is part of a larger strategic plan to strengthen the group’s capital base and expand its market operations.

Revealing the development while speaking on the floor of the Nigeria Exchange Limited, FBN Holdings’ Group Managing Director, Nnamdi Okonkwo explained that this rights issue is only the beginning of a larger recapitalization effort. Okonkwo disclosed plans to raise an additional ₦300 billion at the company’s upcoming Annual General Meeting (AGM). This phased approach is expected to raise FBN Holdings’ capital to ₦730 billion, well above the Central Bank of Nigeria’s (CBN) minimum requirement of ₦500 billion for top-tier banks.

“We recognized the level of capital firepower required early on, which is why we planned for a ₦150 billion rights issue this year,” Okonkwo stated. “At our next AGM, we will seek approval to raise a further ₦300 billion, enabling us to operate ₦230 billion above the CBN’s required threshold.”

Details of the Rights Issue

The rights issue will offer 5.98 billion shares at 50 kobo each, priced at ₦25.00 per share. It’s open to existing shareholders and is set to close on December 12, 2024. FBN Holdings is the fourth major Nigerian banking group to pursue a capital increase since the CBN raised capital requirements for banks in March 2024, joining the ranks of Guaranty Trust Holding Company (GTCO), Access Holdings, and Zenith Bank Plc. Collectively, these banks have raised a staggering ₦1.26 trillion this year, underscoring the high level of investment needed to stay competitive and compliant in Nigeria’s financial sector.

Investment Plans for the Capital Raised

FBN Holdings has laid out a clear plan for deploying the funds from the capital raise:

1. First Bank Recapitalization: Approximately ₦103.12 billion (68.95%) will be allocated to enhancing First Bank’s Capital Adequacy Ratio (CAR), boosting the bank’s ability to withstand market volatility and support future growth.

2. International Expansion: Nearly ₦29.46 billion (19.7%) will go toward gradual international expansion, as FBN Holdings aims to extend its presence in carefully selected markets. Okonkwo emphasized a “step-by-step approach” to ensure stability and growth.

3. Digital Infrastructure Investment: Around ₦14.73 billion (9.85%) is earmarked for upgrading First Bank’s digital banking and automation systems. As Nigerian customers increasingly prefer digital transactions, FBN Holdings is investing in technology that meets these demands, enabling smooth, remote, and secure transactions.

Strengthening the Diversified Portfolio

FBN Holdings continues to build on its diversified business portfolio, which includes banking, insurance, and asset management services, providing a stable base for sustainable growth. As Okonkwo highlighted, “Our diversified portfolio enables us to adapt to changing market conditions and invest in areas that drive the most value. We continuously assess our portfolio to determine where to strengthen, divest, or scale back.”

The bank’s extensive agent banking network, which commands a 20% market share in Nigeria, and its commitment to tech-driven services give FBN Holdings a competitive advantage in Nigeria’s rapidly evolving banking sector.

Strong Financial Performance

In the first nine months of 2024, FBN Holdings reported a profit before tax of ₦1610.9 billion, marking a 128% increase from the previous year. This growth reflects the impact of its diversified portfolio and strategic investments. In line with its strategy, the company also divested its merchant banking subsidiary, FBNQuest Merchant Bank Limited, to EverQuest Acquisition LLP in September 2024, reinforcing its focus on core banking and financial technology.

A Tech-Driven Future

Reflecting on the importance of technology in FBN Holdings’ operations, Okonkwo stated, “We are a tech-led bank because our customers demand the ability to transact seamlessly, wherever they are. Our investment in digital infrastructure is a commitment to delivering a superior experience.”

As Nigeria’s banking sector undergoes a digital transformation, FBN Holdings’ continued investment in technology places it in a vantage position to meet customer expectations for convenience, security, and accessibility. Shareholders and customers alike can look forward to a more resilient and future-ready institution.

Conclusion

FBN Holdings’ ₦150 billion rights issue will be an important step in maintaining its market position and adapting to the new regulatory landscape in the country. The bank will hope that strengthening its capital base, pursuing technological advancements, and expanding its reach, will help to set the stage for a future of sustained growth and stability.