Ecobank Transnational Incorporated (ETI) says it plans to raise $250 million in additional tier 1 (AT1) capital to strengthen its capital base and support growth.
AT1 is a hybrid security used by banks to improve their capital adequacy ratio without diluting ordinary equity holders immediately.
The resolution was passed at the bank’s extraordinary general meeting (EGM), where shareholders authorised the board of directors to proceed with the issuance.
In a statement dated May 30 and filed with the Nigerian Exchange Limited (NGX) on Thursday, Madibinet Cisse, the company secretary, said the instrument will qualify as AT1 capital.
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“The Extraordinary General Meeting hereby authorises the directors to raise to US$250,000,000 (Two Hundred and Fifty Million United States Dollars) in additional Tier 1 (AT1) capital qualifying instruments,” the statement reads.
“The AT1 shall be available for subscription, (i) with first-order priority to a maximum of one hundred (100) shareholders on a first-come, first-served basis, and (ii) with second-order priority to any other interested investors.
“The conversion price of this AT1 instrument shall be the higher of i. the 5-day VWAP (Volume Weighted Average Price) on the Nigerian Exchange (“NGX”),
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“ii. conversion date, converted into US$ at the Prevailing Exchange Rate and the Floor Price on the Conversion Date of US$0.01 per Ordinary Share.”
In addition to approving the capital raise, the statement said shareholders also voted to amend the bank’s articles of association.
“The above Article 8.10(b) shall not apply in the event of acquisition of shares arising from the conversion of securities issued with the approval of shareholders,” the bank added.
The proposed issuance comes at a time when many Nigerian banks are seeking to strengthen their capital buffers in anticipation of heightened regulatory requirements and evolving market conditions.
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On March 29, 2024, the CBN announced an upward review of the minimum capital requirements for commercial, merchant, and non-interest banks.
