NGX: FBN Holding Records Largest Single-day Increase in 5-months on CBN's Recapitalization Plan

• Following the report of planned recapitalization, some banking stocks have reacted
• FBN Holding shares rose by 10%, its most significant increase in five months, on Monday
• Sterling Holdings Plc and Access Holdings Plc also saw significant increases at the close of the day

Legit.ng journalist Zainab Iwayemi has over three years of experience covering the Economy, Technology, and Capital Market.

FBN Holdings and other Nigerian banks have reacted to the planned recapitalization of Nigeria's stock market.

This follows the report that the Central Bank of Nigeria is planning to shore up the capital base of Nigerian banks in the country,

Data from the Nigerian Exchange shows as of the close of trade on Monday, November 27, 2023, the shares of some banks have responded positively to the news.

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Naira’s loss at the official and parallel markets upsets Tinubu, CBN’s $1 trillion GDP plan

Banking index improved

The banking index, which measures the country's biggest lenders, rose 1.7% to 754.95. According to a Bloomberg report, this is the most it recorded in almost a month.

FBN Holdings Plc recorded the biggest one-day increase in five months. The company advanced 10%, the maximum permitted in daily trading by the Nigerian market, to N22 naira per share.

Access Holdings Plc saw its biggest advance in almost a month. The financial institution rose 4.3% to N18.10, while Sterling Financial Holdings Plc gained 5% to N3.73.

Joshua Odebisi, bank equity analyst at RMB Nigeria Stockbrokers, said:

Investors are anticipating a few things that can happen such as capital raising, which has potential upside for those taking position now.

According to Odebiyi, if the central bank sets a much higher capital requirement, FBN has the biggest gaps to fill.

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No more N956/$: Naira recovers by 16%, set for more gains on Cardoso’s $1 trillion GDP target

FBN had previously received consent from shareholders to raise up to N150 billion through a rights offering in new shares.

The strategy was unveiled in August following the revelation by competitor Fidelity Bank Plc that it will seek funding from the market, indicating a willingness to increase capital reserves in the face of the weakening naira.

The currency has experienced a 40% decline in value relative to the US dollar since the easing of foreign exchange controls in June.

In the third quarter, FBN's capital adequacy ratio was 16%, which is not far from the 15% minimum required for foreign banks. This compares with Access Bank's 19.6%.

Naira's loss at the official and parallel markets upsets Tinubu, CBN's $1 trillion GDP Plan

Legit.ng reported that the Governor of the Central Bank of Nigeria, Olayemi Cardoso, recently revealed that President Bola Tinubu's seven-year economic plan for Nigeria is to achieve a $1 trillion economy.

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CBN discloses reason Naira gained over N100/$, says 31 banks paid to offset FX backlogs

The CBN governor said to achieve the ambitious goal, Nigerian banks must recapitalize to carry the dream and vision of a $1 trillion GDP economy.

Cardoso did not disclose the amount the banks would require as their minimum capital base. Still, analysts speculate that the apex bank would require that the banks recapitalize to the tune of N trillion naira.

Source: Legit.ng