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Economy

CAC issues guidelines for banks recapitalisation, merger

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The Corporate Affairs Commission has issued fresh guidelines to assist Deposit Money Banks in the ongoing recapitalisation.

The commission, in a statement signed by its management and posted on its Facebook account on Friday, said the new directive is pursuant to its powers under Section 8 (1) (e) of the Companies and Allied Matters Act No. 3 of 2020, stressing immediate adherence to the policy.

It said the new guidelines were issued to guide proper filing for new incorporations, increase in share capitals, mergers and upgrade or downgrade of licence authorisation.

For new incorporations, the CAC stated that intending applicants must submit necessary requirements including, “An approved name reservation or availability, approval-in-principle from sector regulator, duly completed on-line incorporation form and payment of stamp duty and filing fees for the category of license authorisation.”

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It added that a certificate of incorporation shall be issued within 24 hours for applications that satisfy all requirements for incorporation of companies prescribed in the, “Commission’s operations checklists available at www.cac.gov.ng/resources.”

Also, banking institutions seeking to increase their share capital through private placements, rights issues and/or offers for subscription must submit a duly signed company resolution, return of allotment and other statutory declaration by directors verifying that the issued share capital is fully paid- up

Other requirements include, “Notice of the fact that regulatory approval is required, an affidavit deposed to by a director of the company to the effect that regulatory approval is required for the increase, an amended memorandum of association reflecting the new share capital.

“Payment of stamp duties and filing fees, Issuance of a letter acknowledging notice of increase and requirement of regulatory approval, filing of regulatory approval and the issuance of a certificate of increase.”

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Under this category, the commission warned that the notice of the fact that regulatory approval is required must be filed in accordance with the provisions of Section 127 (3), (4) & (5) of CAMA.

“Annual returns and information on persons with significant control must be filed up-to-date and certificate of increase shall be issued within 24 hours of filing of regulatory approval,” it said.

Similarly, small and medium banking institutions seeking to merge must submit duly signed special resolution for merger by each of the merging companies.

Other requirements are “the scheme of merger duly approved by the Securities and Exchange Commission.

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“A certified true copy of court order authorising Extraordinary General Meeting of each of the merging companies. Evidence of publication of court ordered meeting in two newspapers and the Federal Gazette and a CTC of Court order sanctioning the Scheme of Merger.

“All enquiries and complaints on these guidelines and applications submitted in pursuance of the recapitalisation exercise should call +234 816 920 9551,” the statement added.

Recall that the Central Bank of Nigeria in March 2024 directed all banks to increase their capital base for improved productivity.

The apex bank had directed commercial banks with international authorisation to increase their capital base to N500bn and national banks to N200bn.

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It also said commercial banks with national licences must meet a N200bn threshold, while those with regional authorisation are expected to achieve a N50bn capital floor.

This process has commenced fully with banks issuing public offers and rights issues to meet the two year target.

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Economy

FG services foreign debt with $3.5bn

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The Federal Government spent $3.58 billion servicing its foreign debt in the first nine months of 2024, representing a 39.77 per cent increase from the $2.56bn spent during the same period in 2023.

This is according to data from the Central Bank of Nigeria on international payment statistics.

The significant rise in external debt service payments shows the mounting pressure on Nigeria’s fiscal balance amid ongoing economic challenges.

Data from CBN’s international payment statistics reveal that the highest monthly debt servicing payment in 2024 occurred in May, amounting to $854.37m.

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In comparison, the highest monthly expenditure in 2023 was $641.70m, recorded in July. The sharp contrast in May’s figures between the two years ($854.37m in 2024 versus $221.05m in 2023) highlights the rising cost of debt obligations, as Nigeria battles massive devaluation of the naira.

The CBN showed significant month-on-month changes in debt servicing costs, with some months recording sharp increases compared to the previous year. A breakdown of the data revealed varied trends across the nine months.

In January 2024, debt servicing costs surged by 398.89 per cent, rising to $560.52m from $112.35m in January 2023. February, however, saw a slight decline of 1.84 per cent, with payments reducing from $288.54m in 2023 to $283.22m in 2024.

March recorded a 31.04 per cent drop in payments, falling to $276.17m from $400.47m in the same period last year. April saw a significant rise of 131.77 per cent, with $215.20m paid in 2024 compared to $92.85m in 2023.

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The highest debt servicing payment occurred in May 2024, when $854.37m was spent, reflecting a 286.52 per cent increase compared to $221.05m in May 2023. June, on the other hand, saw a 6.51 per cent decline, with $50.82m paid in 2024, down from $54.36m in 2023.

July 2024 recorded a 15.48 per cent reduction, with payments dropping to $542.50m from $641.70m in July 2023. In August, there was another decline of 9.69 per cent, as $279.95m was paid compared to $309.96m in 2023. However, September 2024 saw a 17.49 per cent increase, with payments rising to $515.81m from $439.06m in the same month last year.

The data raises concerns about the growing pressure of Nigeria’s foreign debt obligations, with rising global interest rates and exchange rate fluctuations contributing to higher costs.

The global credit ratings agency, Fitch, recently projected Nigeria’s external debt servicing will rise to $5.2bn next year.

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This is despite the current administration’s insistence on focusing more on domestic borrowings from the capital market.

It also estimated that approximately 30 per cent of Nigeria’s external reserves are constituted by foreign exchange bank swaps.

Regarding external debt, the agency said external financing obligation

The Federal Government spent $3.58 billion servicing its foreign debt in the first nine months of 2024, representing a 39.77 per cent increase from the $2.56bn spent during the same period in 2023.

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This is according to data from the Central Bank of Nigeria on international payment statistics.

The significant rise in external debt service payments shows the mounting pressure on Nigeria’s fiscal balance amid ongoing economic challenges.

Data from CBN’s international payment statistics reveal that the highest monthly debt servicing payment in 2024 occurred in May, amounting to $854.37m.

In comparison, the highest monthly expenditure in 2023 was $641.70m, recorded in July. The sharp contrast in May’s figures between the two years ($854.37m in 2024 versus $221.05m in 2023) highlights the rising cost of debt obligations, as Nigeria battles massive devaluation of the naira.

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The CBN showed significant month-on-month changes in debt servicing costs, with some months recording sharp increases compared to the previous year. A breakdown of the data revealed varied trends across the nine months.

In January 2024, debt servicing costs surged by 398.89 per cent, rising to $560.52m from $112.35m in January 2023. February, however, saw a slight decline of 1.84 per cent, with payments reducing from $288.54m in 2023 to $283.22m in 2024.

March recorded a 31.04 per cent drop in payments, falling to $276.17m from $400.47m in the same period last year. April saw a significant rise of 131.77 per cent, with $215.20m paid in 2024 compared to $92.85m in 2023.

The highest debt servicing payment occurred in May 2024, when $854.37m was spent, reflecting a 286.52 per cent increase compared to $221.05m in May 2023. June, on the other hand, saw a 6.51 per cent decline, with $50.82m paid in 2024, down from $54.36m in 2023.

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July 2024 recorded a 15.48 per cent reduction, with payments dropping to $542.50m from $641.70m in July 2023. In August, there was another decline of 9.69 per cent, as $279.95m was paid compared to $309.96m in 2023. However, September 2024 saw a 17.49 per cent increase, with payments rising to $515.81m from $439.06m in the same month last year.

The data raises concerns about the growing pressure of Nigeria’s foreign debt obligations, with rising global interest rates and exchange rate fluctuations contributing to higher costs.

The global credit ratings agency, Fitch, recently projected Nigeria’s external debt servicing will rise to $5.2bn next year.

This is despite the current administration’s insistence on focusing more on domestic borrowings from the capital market.

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It also estimated that approximately 30 per cent of Nigeria’s external reserves are constituted by foreign exchange bank swaps.

Regarding external debt, the agency said external financing obligations through a combination of multilateral lending, syndicated loans, and potentially commercial borrowing will raise the servicing from $4.8bn in 2024 to $5.2bn in 2025.

The anticipated servicing includes $2.9bn of amortisations, including a $1.1bn Eurobond repayment due in November.

The Small and Medium Enterprises Development Agency and economists have stated that the rise in Nigeria’s public debt might create macroeconomic challenges, especially if the debt service burden continues to grow.

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The Chief Executive Officer of the Centre for the Promotion of Public Enterprises, Dr Muda Yusuf, explained that the situation could lead to a vicious circle, warning that “we don’t end up in a debt trap.”

He said, “I think there is a need for us to be very conscious of and watch the rate of growth of our public debt. Because it could create macro-economic challenges especially if the burden of debt service continues to grow.”

He maintained that there is a need for the government to reduce the exposure to foreign debts because the number has grown so due to the exchange rate.s through a combination of multilateral lending, syndicated loans, and potentially commercial borrowing will raise the servicing from $4.8bn in 2024 to $5.2bn in 2025.

The anticipated servicing includes $2.9bn of amortisations, including a $1.1bn Eurobond repayment due in November.

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The Small and Medium Enterprises Development Agency and economists have stated that the rise in Nigeria’s public debt might create macroeconomic challenges, especially if the debt service burden continues to grow.

The Chief Executive Officer of the Centre for the Promotion of Public Enterprises, Dr Muda Yusuf, explained that the situation could lead to a vicious circle, warning that “we don’t end up in a debt trap.”

He said, “I think there is a need for us to be very conscious of and watch the rate of growth of our public debt. Because it could create macro-economic challenges especially if the burden of debt service continues to grow.”

He maintained that there is a need for the government to reduce the exposure to foreign debts because the number has grown so due to the exchange rate.

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Economy

Oil imports drop by $1.52bn in Q2/24 – says CBN

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Nigeria’s oil importation dropped to $2.79bn from $4.31bn in Q2 of 2024. This amounts to $1.52bn decline or a 35 per cent decline.

This development was contained in the Central Bank of Nigeria’s quarterly economic report for the second quarter of 2024 released recently.

This reduction highlights shifting dynamics in the nation’s oil and gas sector amid ongoing structural and economic adjustments following the removal of fuel subsidies under the administration of President Bola Tinubu.

The report also noted that the overall value of merchandise imports contracted, falling by 20.59 per cent to $8.64bn from $10.88bn recorded in Q1 2024.

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The sharp decline in oil imports contributed significantly to this trend, the report noted.

The report reads: “Merchandise import decreased in Q2 2024, following the decline in the import of petroleum products. Merchandise imports decreased by 20.59 per cent to $8.64bn, from $10.88bn in Q12024.

“Analysis by composition indicated that oil imports decreased to $2.79bn, from $4.31bn in the preceding quarter.

“Non-oil imports also declined to $5.85bn, from $6.57bn in the previous quarter. A breakdown of total import showed that non-oil imports accounted for 67.72 per cent, while oil imports constituted the balance.”

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Economy

Naira slumps against dollar to end on negative note

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The Naira depreciated against the dollar on Friday at the foreign exchange market to end the week on a negative note.

FMDQ data showed that the weakened to N1678.87 per dollar on Friday from the N1639.50 exchange rate on Thursday.

This represents a N39.37 depreciation against the dollar compared to N1678.87 exchanged on Thursday.

Meanwhile, at the parallel market, the naira gained N10 to exchange at N1740 per dollar on Friday compared to N1750 recorded the previous day.

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The development comes as Foreign Exchange transactions turnover surged astronomically to $1403.76 million on Friday from $244.96 million on Thursday, according to FMDQ data.

DAILY POST reports that in the week under review, the naira recorded mixed sentiments of gains and losses.

This showed Naira had continued to experience fluatuations in the FX marketers despite the Central Bank of Nigeria interventions.

Recall that on Wednesday, CBN authorised commercial, merchant, and non-interest banks in the country to manage tradeable foreign currencies deposited in domiciliary accounts established through the new Foreign Currency Disclosure, Deposit, Repatriation, and Investment Scheme.

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