SEC releases framework for recapitalization of banking sector

Following a recent directive from the Central Bank of Nigeria (CBN) to commercial banks in the country to increase their capital to support the country’s $1 trillion target, the Securities and Exchange Commission (SEC) has released a comprehensive framework for the 2024 recapitalization program .

The CBN in a memo has directed banks with international reputation to increase their capital base to N500 billion, national banks to N200 billion, and regional banks to N50 billion.

The SEC said the framework posted on its website on Friday will ensure that the capital raising process is conducted efficiently, transparently and in a manner that protects the interests of all stakeholders.

It is also hoped that this will serve as a guideline for Banks/Maintenance Companies of Issuers and Capital Market Players in submitting requests for additional capital and/or mergers and acquisitions.

The framework will also provide detailed guidance for banks, holding companies and market participants to successfully navigate the recapitalization process.

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Another objective of this framework is full disclosure of material facts in accordance with the Investment and Securities Act of 2007, the Commission’s Rules and Regulations, and other relevant laws to ensure proper and timely review of transactions.

“As the regulatory agency 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 raising process by banks.

“This framework outlines the guidelines and procedures that banks must follow to raise capital through rights issuance, private placement, or other approved methods during the 2024-2026 recapitalization period,” he said.

By: Babajide Okeowo

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