By Ikechukwu Amaechi
A lot of mischief is going on in the banking sub-sector of Nigeria’s financial ecosystem since the Central Bank of Nigeria, on June 3, 2024, announced the revocation of the banking license of Heritage Bank Plc.
The not so subtle campaign by some faceless groups to demarket an otherwise solid financial institution like the Fidelity Bank Plc., however, has not escaped the attention of the discerning banking publics. But it is a mischief taken too far.
In revoking the banking license of Heritage Bank,
the CBN made it clear that its board and management has been unable to improve
the bank’s financial performance, a situation which the country’s apex bank
says constitutes a threat to the country’s financial stability.
A statement by Mrs. Hakama Sidi
Ali, Ag. Director, Corporate Communications of the CBN, said it acted in
accordance with its mandate to promote a sound financial system in Nigeria and
in exercise of its powers under Section 12 of the Banks and Other Financial
Act, BOFIA, 2020.
Many Nigerians, particularly
those abreast of the goings on in the banking industry did not raise any
eyebrows at the news of the revocation and subsequent appointment of the
Nigeria Deposit Insurance Corporation, NDIC, as the liquidator.
But since then, mischief makers
have been bandying the names of other banks – Fidelity Bank, Wema Bank, Polaris
Bank and Unity Bank – that will go the Heritage way. To make their spurious
claims seem real, they recirculated a circular issued by CBN on January 10,
2024, notifying the public about the dissolution of the Boards of Union,
Keystone, and Polaris banks as though it was issued on June 10, 2024.
And even when the CBN, while
insisting that the case of the now defunct Heritage Bank was an isolated one,
stated unequivocally that allegations of further revocation of licenses prior
to the completion of the bank recapitalisation exercise were mere fabrications
of those who didn’t wish the banking sector well, such insinuations have
persisted.
But the question that continues
to concentrate the minds of many Nigerians is: Why Fidelity Bank? Of course,
the question is pertinent considering the fact that even if the January 10
notification memo dissolving the boards of Union, Keystone and Polaris banks is
taken to mean that the banks were in trouble, Fidelity Bank was not one of
them.
It is, however, instructive that
this mischief has become more strident in the last one week since Fidelity Bank
signed the necessary documentation to raise about N127.1 billion from a public
offer and rights issue to its existing shareholders to raise its capital base
in line with the CBN’s fresh capitalisation directive.
The bank is eyeing N97.5 billion
fresh funds from its public offer and N29.6 billion from its rights issue which
offers existing shareholders one new ordinary share for every 10 ordinary
shares held as at January 5, 2024, at N9.25 per share. For the Public Offer,
10,000,000,000 ordinary shares of 50 Kobo each will be offered to the general
investing public at N9.75 per share when the acceptance and application lists
for the rights issue and public offer open on Thursday, June 20, 2024.
Speaking at the signing ceremony
which held at the board room of the bank’s head office in Lagos on Wednesday,
June 5, the Managing Director and Chief Executive Officer, Nneka Onyeali-Ikpe,
disclosed that “the proceeds of the combined offer will be applied towards
investment in IT infrastructure, business and regional expansion, and
investment in product distribution channels.”
With an international operating
license from the CBN, Fidelity Bank is mandated to raise its capital base to
N500 billion within the next two years and for a bank that is sure of its
business fundamentals, it is not a surprise that it has effectively positioned
itself at the forefront of achieving the revised minimum capital requirements
for Nigerian commercial banks. No other bank is yet to embark on the process.
Could that be the reason for the
campaign of calumny? If it is, then those on this demarketing campaign are
tactless and dim. They would have known that the campaign died even before it
took off.
But the dim-wittedness of the
agents of doom beggars belief. If not, how could one envisage that one of the
high flying financial institutions in Nigeria could be at the verge of being
liquidated? What explanation will even the CBN give for taking such a step
because the truth remains that if Fidelity Bank is declared insolvent today,
then no other bank is safe.
Why?
In its report on the best
performing banks in Q1 2024 based on pre-tax profit, Nairametrics, an online
business magazine, said: “Fidelity Bank Plc. posted a pre-tax profit of N39.5
billion, marking a 120 per cent growth from the N17.9 billion pre-tax profit
recorded in Q1 2023. During the quarter, the bank posted a net interest income
of N99.6 billion, marking a 90 per cent YoY growth from Q1 2023. Fidelity Bank
posted gross earnings of N192.1 billion during the quarter, as it also recorded
a net income of N31.4 billion, up by 101 per cent YoY from N15.7 billion as of
Q1 2023.”
Based on its outstanding
financial performance, the bank was voted the most trusted wealth management
company for 2023, earning top rankings for “financial soundness, quality of
products and services, protecting privacy and security, and sensitivity to
customer needs” by Investor’s Business Daily.
The odious attempt to
precipitate a run on Fidelity Bank is financial sleight of hand of the worst
sort. While the bank is not at any risk considering its very robust
fundamentals, the banking industry may be worse such invidious campaign if
unchecked.
Those who are trying to
instigate instability in the country’s financial ecosystem should desist.
Competition must not be a sleight of the hand battle.
*Amaechi
is the publisher of TheNiche (ikechukwuamaechi@yahoo.com)
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