The Board of Directors of Abbey Mortgage Bank has approved plans to raise at least N100 billion through various financial instruments, in a move aimed at expanding its operations and meeting regulatory requirements.
The capital raise will support the bank’s transition from a primary mortgage bank to a regional commercial bank, aligning with the Central Bank of Nigeria’s (CBN) minimum capital requirements of N50 billion.
In January, Abbey Mortgage Bank sought shareholders’ approval to proceed with its plan to convert from a mortgage bank to a regional commercial bank, which was granted by the shareholders.
Abbey Mortgage Bank’s funding strategy
In a statement after it’s 33rd Annual General Meeting (AGM) on Wednesday, signed by Company Secretary, Geoff Amaghereonu, the approved funding strategy includes the issuance of shares via rights issues and public offers, alongside financial instruments such as global depository receipts, commercial papers, loans, convertible and non-convertible securities, medium-term notes, and bonds.
- The funds may be raised in tranches, series, or proportions, with terms and interest rates set by the Board, subject to regulatory approval.
- As part of the capital raise, the Board has been authorized to enter into agreements, execute relevant documents, and take all necessary steps to ensure a seamless transition.
- This includes the appointment of professional advisers, securing regulatory approvals, allotting shares, and listing them on the Nigerian Exchange Group Limited.
Leveraging financial processes to optimize capital acquisition
The bank aims to leverage book-building and other financial processes to optimize capital acquisition while complying with all directives from financial regulatory authorities.
The decision emphasized the institution’s commitment to strengthening its financial standing and expanding its services as it moves toward regional banking operations.
Industry experts have noted that the shift from mortgage banking to regional commercial banking will provide increased financial inclusion and access to broader banking services, particularly in underserved areas. The move is also expected to position the bank competitively within Nigeria’s evolving financial sector.
What you should know
- In March 2024, the CBN increased the minimum capital base for commercial banks with international authorization to N500 billion and national banks to N200 billion.
- While commercial banks with international authorization must now meet a minimum capital base of N500 billion, those with national authorization need N200 billion.
- Regional authorization holders are required to maintain N50 billion. Merchant banks must have N50 billion, and non-interest banks with national and regional authorization must have N20 billion and N10 billion, respectively.