Leading financial institution to issue bonds, shares after getting national bank status

Nigeria's Wema Bank said on Thursday it would resume plans for a share sale to fund growth and has also started a process to raise $100 million worth of naira bonds after getting approval to switch from a regional to a national bank.

Wema Bank said in April it aimed to complete a $100 million seven-year dollar Tier 2 bond issue by the second quarter this year to fund its growing dollar loan book and also issue fresh equity of up to 40 billion naira ($201.03 million) by the fourth quarter.

But the bank had to suspend the plans partly because of a weakening in the naira in the domestic market due to the plunge in oil prices, chief finance officer Tunde Mabawonku, told Reuters.

Mabawonku said the bank would now raise the Tier 2 bond in the domestic market during the first quarter of next year.

"To ensure that this approval is leveraged appropriately, we are already in the process of raising $100m in Tier 2 capital and would commence a Tier 1 capital raise in 2016," Wema chief executive Segun Oloketuyi said in a statement.

The regional bank said on Thursday it received central bank approval this week to become a national bank after its capital base rose to 43.8 billion naira ($220 million) complying with capital requirements for this category.

In Nigeria, a regional bank can only operate within 6-12 of the country's states while national banks can operate in all 36 states. Regional banks require capital of 10 billion naira to operate compared with 25 billion naira for national banks.

In 2009, Wema Bank shrank its business to become a regional bank after the central bank made it recapitalise in the wake of a financial crisis that nearly sank the lender and eight others.

Four years on, Wema Bank has completed a 40 billion naira share placement to increase its capital base and it also began the process of securing a national license from the central bank.

Oloketuyi said the bank was on course with its turnaround and would select business locations across the country with a focus on areas where return on investment will be maximised.

Shares in Wema traded flat on Thursday giving it a market value of 37.1 billion naira.