By Yakubu LAAH InvestAdvocate
Lagos (INVESTADVOCATE)-Pan-African lender, Ecobank Transnational Incorporated (ETI) is considering selling a stake in Ecobank Nigeria in order to raise about $500 million to shore up the capital base of its Nigerian subsidiary, according to a Bloomberg report.
The report quoted Albert Essien, chief executive officer (CEO) of ETI as saying it’s possible that could happen. “There’s a board policy that we could, if we wanted, sell down and hold 75 percent in our subsidiaries,” Bloomberg quoted Essien as saying in a telephone interview from Abidjan, the capital of Cote d’Ivoire.
According to the pan-African lender, it needs to increase the capital of Ecobank Nigeria, by the first quarter of next year to meet new rules from the Central Bank of Nigeria (CBN).
The report had quoted Jibril Aku, the managing director (MD) of Ecobank Nigeria as saying in November 14 that a $500 million boost would take its capital-adequacy ratio to about 18 percent, above the minimum requirement of 16 percent set by the CBN.
Essien affirmed that ETI had transferred to Ecobnak Nigeria the “larger portion” of the $206 million in cash it received in October when it sold a 20 percent stake to South African lender, Nedbank Group Ltd. ‘’The rest of Ecobank Nigeria’s capital needs will come from retained earnings and a “private placement” of equity,’’ he said.
The ETI CEO added that Nedbank and Qatar National Bank SAQ, the second-biggest owner of ETI with a 17 percent stake, haven’t been approached about buying a stake in Ecobank Nigeria.
He disclosed that Nedbank parent Old Mutual Plc said it earmarked 4.3 billion rand ($393 million) for African acquisitions and had identified Nigeria, Kenya and Ghana as key areas. “The process has just started,” Essien said.
The report further affirmed that Ecobank Nigeria which had $9.6 billion of assets at the end of September is Nigeria’s seventh-biggest bank and made a $157 million post-tax profit in the first nine months, up 79 percent from a year earlier, the reported quoted a presentation posted on the website of ETI.
Essien revealed that the rest of the money from Nedbank’s acquisition has been put toward other subsidiaries, including Ecobank Kenya.
“We know that some might need capital down the line, they do for regulatory purposes and sometimes for business purposes,” he said.
He noted that ETI’s rules prevent any institution from buying more than 24.99 percent of its shares and it prefers none to hold more than 20 percent to ensure a broad shareholder base.
“The policy of keeping everybody at 20 percent is for diversification of shareholding,” the report quoted Essien as saying by phone.
At close of business on the Nigerian bourse on Friday, share price ETI gained 0.50 kobo as it opened at N17.00 and closed at N17.05 gaining 0.29 percent.
