The Securities and Exchange Commission (SEC) has published the Framework for Banking Sector Recapitalisation Programme.
Following prevailing macroeconomic challenges and headwinds occasioned by external and domestic shocks, the Central Bank of Nigeria (CBN) mandated a recapitalisation programme for banks to strengthen their asset base and support economic growth in line with the Federal Government’s target of achieving a US$1 trillion economy by 2030.
SEC on its website stated thus:
Capital market has a significant role to play in facilitating the recapitalisation programme as the Banks are expected to leverage the market to raise the needed funds and /or engage in various forms of business combinations.
As the regulatory institution mandated to regulate and develop the Nigerian capital market, the Securities and Exchange Commission (SEC), has the responsibility to ensure a smooth, transparent, and efficient capital raise process by the banks. This framework outlines the guidelines and procedures banks are required to follow to raise capital through rights issuance, private placements, or other approved methods during the 2024-2026 recapitalisation period.
OBJECTIVES
According to SEC, the objectives for framework are stated below:
- To serve as a comprehensive guide for Banks/Holding Companies and market participants to navigate the recapitalisation programme effectively.
- To ensure that the capital raising process is conducted efficiently, transparently, and in a manner that protects the interests of all stakeholders.
- To serve as a guide to the Banks/Holding Companies issuers and Capital Market Operators in filing applications for capital raise and/or mergers and acquisitions.
- To guide in ensuring full disclosure of material facts in compliance with the Investments and Securities Act 2007, Rules and Regulations of the Commission and other relevant laws.
- To ensure proper and timely review of the transactions
CAPITAL RAISING OPTIONS
- Rights Issue: Banks/Holding Companies may offer new shares to existing shareholders on a pro-rata basis.
- Public Offer: Banks/Holding Companies may offer shares to the general public.
- Private Placements: Direct issuance of shares to a select group of investors.
- Mergers and Acquisitions and any form of business combination