Two Nigerian banks; Diamond and Fidelity, have said that they would raise about $1.1 billion (about N175 billion) in debt or equity to expand their lending operations this year.
Diamond Bank’s Chief Financial Officer, CFO, Abdulrahman Yinusa said, Tuesday, that the bank will raise $750 million (about N119.25 billion), while Fidelity Bank’s Chief Executive Officer, CEO, Reginald Ihejiahi said Fidelity has asked Citibank to lead-manage a planned five-year Eurobond this year that should come in at around $350 million (about N55. 65 billion) to fund oil, power and infrastructure projects.
Diamond Bank Plc, had disclosed plans to raise $750 million to finance projects and meet central bank’s capital requirements.
The lender’s shares dropped 10 per cent to N6.3, the most on record. Diamond Bank has advanced 28 per cent this year, compared with the 19 per cent rise of the Bloomberg NSE Banking 10 Index, which tracks the most capitalized lenders in the industry.
The bank plans to raise the $750 million in shares or bonds this year to fund more projects and raise its capital adequacy ratio, a measure of financial strength, to between 20 per cent and 25 per cent, Yinusa said in an interview with Reuters.
Also, Fidelity Bank’s CEO, Ihejiahi also said that the $350 million bond would help meet demand for dollar financing, much of it from energy clients in the country.
“We are bolstering our balance sheet on the dollar side. There will be a Eurobond later in the year,” he said.
He added that the bank was targeting a 15 per cent growth in its loan porfolio for 2013, from its current N400 billion ($2.54 billion) value.
The mid-tier lender launched a $100 million two-year loan facility in February, also managed by Citi, which analysts said tested the water for possible bigger issuance.
According to Ihejiahi, the bank had several projects with dollar financing needs, some of them with power companies buying state assets under a privatisation programme launched this year. They included two “significant size gas pipeline projects.”
Fidelity has also a $500 million Memorandum of Understanding, MoU, with Royal Dutch Shell to finance its local contractors, he said, even as the bank’s operations had been heavily focused towards the corporate side, with around 70 per cent of its loan book in the corporate sector, against 20 per cent in retail banking.
Ihejiahi however, added that the bank was looking to increase the share of retail customers over time.
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Are these banks investment banks now? We know that they have a national license to operate as a deposit money banks not investment/merchant banks.
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