Diamond Bank, FCMB Set To Raise Fresh Capital

Diamond Bank Plc and First City Monument Bank Limited (FCMB) have disclosed plans to raise fresh capital.

According to Diamond Bank MD, Uzoma Dozie, the bank is considering raising fresh capital and selling some assets in order to strengthen its capital base.

Diamond Bank’s capital adequacy ratio had fallen to 15.6 percent of assets by mid-year from 18.6 percent a year ago.

“We are doing a capital management plan and that will determine how much capital we want to raise, tenor and size,” Reuters quoted Dozie to have told an analysts’ conference call.

“We don’t have any need to grow our branch network any more. We are also looking at some assets that we can dispose of and we are a long way into that,” he said.

Diamond Bank’s non-performing loan ratio rose to 8.9 percent in the first half, above the central bank’s target level of 5 percent where it stood a year ago. It expects to bring down the ratio to 7.5 percent by year end, he said.

In a related development, FCMB plans to raise N10 to N15 billion ($47 million) of tier II capital to boost its balance sheet and will target its retail investors for the offering, its chief executive officer, Ladi Balogun, said on Wednesday.
Balogun said its capital adequacy ratio was close to the regulatory limit of 15 percent of assets at mid-year, and that it was undertaking the capital raising to provide an additional cushion.

He said the bank was also slowing down loan growth, adding that a rate of increase of 14.8 percent in the first half was largely due to the 40 percent drop in the value of the naira against the dollar since the dollar exchange rate peg was removed in June. Otherwise loans declined by 1.9 percent, said Balogun, whose term as CEO ends next year.