DIAMOND Bank is planning the biggest fundraising by a Nigerian lender this year as banks seek dollars to finance oil, power and other infrastructure projects, while meeting central bank requirements for capital reserves. The Lagos-based lender planned to raise as much as $750 million (R6.7bn) in shares or bonds this year to fund more projects and raise its capital adequacy ratio, a measure of financial strength, to between 20 percent and 25 percent, chief financial officer Abdulrahman Yinusa said on Tuesday.
The Central Bank of Nigeria requires a ratio of 15 percent and Diamond Bank’s was 17.3 percent at the end of 2012.
Fidelity Bank plans to issue a $350m eurobond to finance infrastructure projects.
While Nigeria’s banks were returning to profit after the industry came near to collapse in the debt crisis in 2008 and 2009, Ronak Gadhia, an African equity analyst at Exotix in London, said many lenders needed to rebuild their capital adequacy requirements. Lenders also needed access to dollars if they wanted to benefit from project lending, he said.
“The retail market hasn’t really taken off and most of their loan growth is being driven by big infrastructure lending or big projects in the oil and gas industry or the power industry which everyone seems to be getting excited about. A lot of that lending has to happen in dollars,” he said.
The index of Nigeria’s top 10 banks ended down almost 3 percent yesterday in volatile trade, on profit-taking after some lenders declared good dividends at the start of the earnings season, traders said.
Diamond Bank, the worst hit, fell 20 percent in two days after saying it will not pay a dividend and instead announced plans to raise $550m in fresh capital. –