Wema Bank exceeds CBN’s capital adequacy ratio

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Wema Bank Plc has said its Capital Adequacy Ratio (CAR) Is presently 18.6 per cent, higher than the regulatory body requirement for regional and national bank which is 10 per cent.

The newly granted  National Bank by Central Bank of Nigeria (CBN) noted that in third quarter that ended september 2015, its CAR exceeds
CBN requirement and was not not part of the Banks required to re-capitalize by 2016.

The apex banking regulotry body did not disclose those banks but said they have licenses to operate as regional and national lenders, with respective capital bases of N10 billion  and N25 billion.

With a number of  banks having postponed moves to raise fresh funds, the CBN said it was monitoring the three lenders’ recapitalisation plans, and that 10 others with international status met the 15 per cent minimum capital rate for that category of bank at the end of June.

Wema Bank in a statement expressed that it has existing shareholders funds of N44billion, higher than the N25billion shareholders funds required for National Banks.

The Bank noted that its decision to go National is largely, “for us to be able to take advantage of any opportunities where they exist.

“Our approach to the implementation of a national banking expansion will be a phased roll-out of branches.

“First, we will quickly open branches in locations where we already have existing infrastructure and captive business to ensure we take immediate advantage of the latent business opportunities in these locations.

“Subsequently, we will take a cautious approach to expansion and only deploy resources to areas that have been assessed as commercially viable.

“Going by the encouraging and growing level of electronic banking penetration in the country, our new branch builds will be very cost effective as the space required to serve will continue to get relatively smaller as it obtains today in more advanced financial systems.

On  $100 million additional capital, the Bank said, its motives was largely to grow its business by next year and to also provide additional buffer to cushion against economic shocks.

“Our plans to raise capital will be a mixture of Tier-1 and Tier 2 capital. The  Tier-1 capital will be largely equity and will most likely be raised through a combination of a Special Private placement and a possible rights issue.

“Yes, we are well aware of the state of the capital markets hence the decision to most likely go through a private placement.

” The Board and Management of the Bank are yet to finalize the decision on this; we expect the Tier-1 capital raise to take place between Q2 and Q3, 2016,” the statement added.

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