UBA courts shareholders backing to power capital injection drive

Business a.m.

UBA, Africa’s global financial institution, is set to take the next step in its journey of growth and expansion as it seeks shareholders’ approval to issue 10.8 billion new ordinary shares to raise its share capital from N17.099 billion to N22.5 billion, during the bank’s upcoming annual general meeting, scheduled for May 24, 2024.

The multinational financial services company, in a bid to fulfill the CBN’s latest regulatory requirements, announced its plan to raise capital through a statement filed on the Nigerian Exchange Limited (NGX), recently. The move comes in response to the CBN’s directive issued on March 28, which set out different capital requirements for different categories of commercial banks, with international license holders required to raise their capital base to N500 billion, national and regional financial institutions to N200 billion and N50 billion respectively.

UBA disclosed that the board would propose various capital raising strategies to shareholders at the upcoming AGM, including public offerings, private placements, rights issue, or other transaction modes in either the Nigerian or international capital markets. The proposal, however, remains subject to regulatory approval and the consent of the bank’s shareholders.

In its filing with the NGX, UBA outlined a broad range of options available for raising capital in the Nigerian and international capital markets.

It stated: “The instruments can either be as a standalone issue(s) or by the establishment of capital raising programmes, whether by way of public offerings, private placements, rights issues and/or other transaction modes, at prices, coupon or interest rates determined through book building or any other acceptable valuation method or combination of methods, in such tranches, series or proportions, within such maturity periods and at such dates and upon such terms and conditions as may be determined by the board of directors of the company subject to obtaining the requisite approvals of the relevant regulatory authorities.”

UBA’s ambitious capital raising plans include an increase in the company’s issued share capital from N17,099,710,683 to N22,500,000,000, which will create additional equity for the bank and provide further support for its growth strategy.

However, with a current capital base of N115.82 billion, UBA faces a significant challenge in raising the additional N384.19 billion required to meet the CBN’s N500 billion minimum capital requirement for international license holders.