The Securities and Exchange Commission (SEC) has published a new framework to support the Central Bank of Nigeria’s (CBN) bank recapitalisation programme, aimed at strengthening the financial system.
This framework, released on Friday, outlines the procedures banks must follow to raise capital effectively and transparently.
Raising Capital
The guidelines are part of the CBN’s directive issued on March 29, which requires Deposit Money Banks (DMBs) to increase their capital bases. International banks must now raise their capital to N500 billion, national banks to N200 billion, and regional banks to N50 billion. This move is intended to enhance the financial stability and resilience of the banks against potential risks.
The SEC’s framework specifies how banks can raise capital through rights issuances, private placements, or other approved methods during the 2024-2026 recapitalisation period.
“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,” the SEC stated.
Supporting Economic Growth
The SEC highlighted the importance of strengthening banks’ asset bases to support economic growth and align with the government’s goal of achieving a $1 trillion economy by 2030.
The capital market plays a crucial role in this process 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 SEC noted.
Application Process
The framework establishes clear guidelines for banks to follow, promoting transparency and protecting the interests of all involved parties.
“It mandates that applications and supporting documents be filed electronically via the dedicated email address offerapplications@sec.gov.ng.
“The SEC will review the submissions and communicate any deficiencies electronically. 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.”
SEC stated, “Incomplete applications will incur a penalty of N1,000,000 and a re-filing fee of N100,000. These penalties ensure banks submit complete and accurate information from the outset.”
Contact and Additional Information
The SEC encourages “banks and stakeholders to reach out for any clarifications or inquiries through the dedicated email address.”
The new framework builds upon existing rules and regulations and should be read in conjunction with the relevant provisions of the Investment and Securities Act, 2007, and the Commission’s Rules and Regulations.
“The SEC reserves the right to request additional information as necessary. However, the process is streamlined by allowing previously submitted documents, such as Memoranda and Articles of Association, to be referenced in subsequent transactions, provided no changes have been made.
“SEC ensures that banks adhere to these guidelines to protect the interests of all stakeholders and support the broader economic goals of the country.”