The stricter requirement that banks are to meet the new capital thresholds with paid-up share capital and share premium only leaves our coverage names in a capital shortfall position. This exclusion of other forms of capital is quite significant given that these other sources account for c. 76.0% of total equity across our coverage. Specifically, the capital of our coverage banks comprises AT-1 (1.7%), retained earnings (27.4%), issued share capital & premium (24.0%), and other reserves (47.1%).
Given the new capital requirements, we expect a lot of equity raises through the prescribed options of private placements, right issues, offers for subscription, and mergers & acquisitions. A few banks may also have to switch licences of authorisation to reduce the burden of compliance. Prior to the CBN's announcement, ACCESSCORP announced a planned capital raise of N365 billion, which comes after FIDELITYBK's private placement and FBNH's proposed N150 billion capital raise.
