It has been revealed that four Deposit Money Banks have rejected a total of N4.8 billion subscriptions from investors in the ongoing recapitalisation exercise in the banking sector.
Among other reasons, it was gathered that the rejection was due mostly to multiple rights subscriptions, non-qualified shareholders, and failure to pass the Capital Verification Exercise of the Central Bank of Nigeria.
The Capital Verification Exercise is an initiative by the CBN aimed at ensuring that banks operating within the country comply with the required minimum capital thresholds set by the apex bank.
This exercise is usually a part of the CBN’s regulatory and supervisory activities to maintain a sound and stable financial system in Nigeria.
Under the ongoing recapitalisation exercise, Zenith Bank Plc, Access Holdings Plc, FCMB Group Plc, and Fidelity Bank Plc have so far announced the result of their rights issue and public offer to the investing public on the Nigerian Exchange Limited.
The four banks raised an estimated N1.02 trillion from the bourse and rejected N4.8 billion subscriptions.
It was gathered that Access Holdings raised N351.01 billion via rights issue, and rejected N1.88 billion subscriptions, while Zenith Bank successfully raised N350.46 billion via hybrid offers (rights issue and public offer) and rejected N1.04 billion subscriptions from investors.
Access Holdings, in its results, disclosed that “81 applications for 26,775,816 shares, valued at N528, 822,366.00 were found to be invalid and were therefore rejected.
“Consequently, a total of 68,426,263 shares, valued at N1, 351,418,694.25 were found to be invalid and therefore rejected having not complied with the terms of the Offer and/or being disqualified by the CBN following CVE.”
“Rejection could come from CBN during capital verification when applicants are considered unfit to own a certain number of shares in banks or engage in suspicious transactions. It could also come in the process of allotment. It is a standard practice in the offer process, and the numbers are usually small or negligible.”
Zenith Bank in its public offer results announced that, “One application for 5,000,000 ordinary shares was disqualified following CBN’s CVE.
“Furthermore, a total of 111 applications for 12,076,837 ordinary shares were found not to be valid under the terms of the Offer and were therefore rejected. In addition, odd lots amounting to 87,140 ordinary shares were also rejected.”
Zenith Bank disclosed further in its rights issue of 5,232,748,964 Ordinary Shares at N36.00 per share based on 1 new Ordinary Share for every six ordinary shares, that “a total of 820 applications for 11,390,454 ordinary shares were rejected as follows: Two applications for 12,528 ordinary shares were rejected as multiple rights subscriptions and three applications for 18,000 ordinary shares were rejected as applications by non-qualified shareholders.”
The bank added that “811 applications for 9,418,080 ordinary shares were rejected as applications not cleared by CBN and four applications for 1,941,846 ordinary shares were rejected as applications for rights already traded.”
FCMB Group and Fidelity Bank rejected N1.47 billion and N436.99 million from public offer and hybrid offers, respectively.
FCMB announced that “39 applications for 200,699,000 ordinary shares valued at N1,465,102,700.00 were rejected having not complied with the terms of the offer and/or being disqualified by the CBN following the completion of capital verification on December 10, 2024.”
For Fidelity Bank, it declared that “458 applications for 22,765,143 ordinary shares totaling N221, 960,144.25 were found not to be valid under the terms of the Offer and were therefore rejected. In addition, 548 applications included odd lots amounting to 198,320 ordinary shares (N1, 933,620.00) which were also rejected.”
On the option of Rights Issue, the bank’s document stated that “No applications were rejected following the CBN’s Capital Verification Exercise, however, a total of 656 applications for 23,037,442 ordinary shares totaling N213, 096,338.50 were found not to be valid based on the terms of the Rights Issue.”
While commenting on the rejected subscriptions, an Investment Banker and Stockbroker, Tajudeen Olayinka, said “Applications are normally rejected when they do not meet the prescribed standard of completeness.
“Rejection could come from CBN during capital verification when applicants are considered unfit to own a certain number of shares in banks or engage in suspicious transactions. It could also come in the process of allotment. It is a standard practice in the offer process, and the numbers are usually small or negligible.
“My only concern is the prolonged process in the allotment of shares and listing on the Exchange due to CBN capital verification that takes time to be concluded.
“I think the CBN can complete capital verification in less than one week because they possess relevant data that could enable them to complete the process in a short period.”
On his part, the Managing Director/CEO of Globalview Capital Limited, Aruna Kebira, said: “The CBN subjected the funding for the operations through special verification. This was to avoid the influx of illicit funds into the system.
“One, the Registrar was to provide evidence of payment before the end of the offer. If not, such an application would be disqualified. Bank statements were to be supplied by the collecting agents to show funding,” he added.
As the banking sector gets into the full recapitalisation year, analysts at Afrinvest said that for 2025, the banking sector’s performance will be a benchmark for broader economic growth, with implications for financial inclusion, credit access, and sectoral diversification beyond oil.
They added that given the past recapitalisation exercise, there may be mergers and acquisitions as well as job losses.
“Bank recapitalisation exercise comes with trade-offs. Consolidation, reminiscent of the 2005 reforms that reduced Nigeria’s banks from 89 to 26, may lead to mergers, acquisitions, and potentially significant job losses. For employees and smaller banks, 2025 could be a year of adaptation or attrition. We are optimistic that this would lead to a more resilient banking industry. Nonetheless, continued FX and inflation pressure could undermine the USD valuation of the capital base at the end of the exercise,” the analysts said.