The Securities and Exchange Commission (SEC) has released a framework designed to support the Central Bank of Nigeria’s (CBN) bank recapitalization programme.
This framework, published on the SEC website yesterday, aims to ensure a smooth, transparent, and efficient capital raising process for banks and holding companies participating in the programme.
The framework serves as a roadmap for banks and market participants navigating the recapitalization programme. “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,” stated the SEC.
It outlines the specific guidelines and procedures that banks must adhere to when raising capital through various methods, including rights offerings, private placements, and other approved options during the 2024-2026 programme period.
The SEC acknowledged the rationale behind the CBN’s directive, highlighting the need to strengthen banks’ asset base and support economic growth in line with the government’s ambitious target of achieving a $1 trillion economy by 2030. The framework in turn recognizes the capital market’s crucial role in facilitating this program 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,” the SEC noted, “it has the responsibility to ensure a smooth, transparent, and efficient capital raise process by the banks.” The framework establishes clear guidelines for banks to follow, promoting transparency and protecting the interests of all involved parties.
The SEC has outlined a streamlined process for application submission. Applications and supporting documents must be filed electronically via the dedicated email address, [email protected]. The Commission will review the submitted materials and electronically communicate any identified deficiencies to the applicants.
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.
The framework also outlines the consequences for incomplete applications. “Where an application is returned for being incomplete – a penalty of N1,000,000 and re-filing fee of N100,000 shall apply,” states the SEC. These penalties are designed to incentivize banks to submit complete and accurate information from the outset.
The SEC through the guidelines encourages banks and stakeholders to reach out for any clarifications or inquiries. A dedicated email address, [email protected], allows for open communication and ensures that banks can navigate the process efficiently.
The Capital Market regulator further clarified that the new framework builds upon existing rules and regulations. It should be “read in conjunction with the relevant provisions of the Investment and Securities Act, 2007 and the Commission’s Rules and Regulations.”
Furthermore, the SEC reserves the right to request additional information as deemed necessary. However, the framework also streamlines the process by allowing previously submitted documents (e.g., Memoranda and Articles of Association) to be referenced in subsequent transactions, provided no changes have been made.
The SEC framework is a direct response to the CBN’s recent directive for banks to bolster their capital base. The CBN has established new minimum capital requirements, with international banks needing to raise their capital base to N500 billion, national banks to N200 billion, and regional banks to N50 billion.
The framework provides a clear roadmap for banks and market participants navigating the CBN’s recapitalization program. With a focus on transparency, efficiency, and adherence to regulations, this framework aims to ensure the program’s success in strengthening Nigeria’s banking sector and supporting the nation’s economic growth aspirations.