Wema Bank scales regulatory hurdle following N40bn rights issue approval

Onome Amuge

Wema Bank Plc has made significant progress in its capital raise programme, securing regulatory approvals for the allotment of its N40 billion Rights Issue, which was initiated in December 2023. With this milestone, the bank has successfully completed the first tranche of its ongoing recapitalisation exercise, acquiring the necessary approvals from all relevant regulatory bodies.

In response to evolving macroeconomic conditions, the Central Bank of Nigeria (CBN) launched a wide-ranging recapitalisation programme in March 2024, mandating commercial banks in the country to raise fresh capital that aligns with the minimum requirements of their respective banking licences.

Spanning a 24-month period from April 1, 2024, to March 31, 2026, the initiative provides Nigerian banks with a two-year window to enhance their capital positions and ensure compliance with regulatory requirements.

At the heart of the CBN’s recapitalisation programme lies a dual-pronged objective which includes fortifying the resilience and competitiveness of the Nigerian financial services sector while also invigorating the country’s wider economy.

By requiring banks to increase their capital bases, the CBN aims to enhance their ability to absorb potential shocks, support economic growth through increased lending, and reinforce Nigeria’s position as a leading financial hub in Africa, ultimately contributing to the country’s overall economic development.

In light of the CBN’s recapitalisation programme, Wema Bank initiated a N40 billion rights issue in December 2023, seeking to augment its capital base and adhere to the CBN’s regulatory requirements.

Following regulatory scrutiny and approval from both the CBN and the Securities and Exchange Commission (SEC), the bank’s rights issue has now been officially sanctioned, enabling Wema Bank to advance its recapitalisation plans and fulfil its vision of becoming a leading financial institution in the Nigerian market.

Moruf Oseni, the managing director and CEO of Wema Bank, in a statement, articulated the bank’s resolve to maintain its commercial banking licence with national authorisation status, positioning the N40 billion rights issue as a crucial step towards this goal.

“We   are   delighted   to   announce   the   conclusion   of   the   1st  tranche   of   our   Capital   Raise Programme, after obtaining the relevant approvals of all regulatory authorities. Our move to commence our Capital Raise Programme very early demonstrates our push for excellence and with a strong emphasis on our digital play, we are set to amass more successes in the coming months.

“We were impressed by the vote of confidence given by our shareholders during the 1st Rights  Issue exercise  as  our shares   were  fully  subscribed.  In  addition,  we  obtained the approval of shareholders at our 2023 Annual General Meeting (AGM) to raise an additional N150 billion to meet the capitalisation threshold set by the CBN.

“The process is expected to be completed within 12-18 months. We are committed to providing optimum returns for every stakeholder and the successful conclusion of this N40 billion rights Issue is a bold step in the right direction,” he stated.

Besides the positive trajectory in Wema Bank’s financial performance and its achievements in recapitalisation efforts, the bank has received further recognition for its strong financial standing. Pan African credit rating agency Agusto and Co recently upgraded the bank’s corporate rating to BBB+, reflecting its solid creditworthiness and reduced credit risk, while global rating agency Fitch reaffirmed the bank’s BBB rating.