Nigeria: Nova Merchant Bank Submits Capital Raising Plan to CBN for Commercial License

Nova Merchant Bank Submits Capital Raising Plan to CBN for Commercial License
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Nova Merchant Bank Limited has announced the submission of its capital raising plan to the Central Bank of Nigeria (CBN) as part of its transition to a national commercial banking license.

Earlier this year, the merchant bank requested an upgrade from the CBN to join the ranks of banks with national authorization. This move comes in anticipation of the CBN’s upcoming recapitalization mandate, which requires deposit money banks with international authorization to raise their capital base to N500 billion by the end of Q1-2026. For a national banking license, a bank must have a share capital and premium totaling N200 billion. Nova Merchant Bank, currently with a capital base of N34 billion, aims to bridge the N184 billion gap through strategic growth plans.

When queried about the strategy to raise the additional N34 billion within the next two years, Kelvin Anyaegbunam, Head of Brand and Communication Unit at Nova Merchant Bank, confirmed that a comprehensive capital raising plan has been submitted to the CBN. The bank has already received an Approval-in-Principle (AIP) from the CBN for this transition.

“In line with this transition, we have submitted a comprehensive capital raising plan to the CBN to increase our share capital to a minimum of ₦200 billion within the next two years, in line with our AIP. We are diligently following up on the plan as presented to the CBN and have already commenced initial steps to meet this target. We have options of Rights Issue, Private Placement, and an Initial Public Offering (IPO), all of which are on the table for us,” said Anyaegbunam.

The bank’s management is confident in meeting this target and starting commercial banking operations. In 2022, Nova Merchant Bank’s net interest income surged to N659.824 million from N189.05 million in 2021. Improved service delivery boosted net fees and commission income to N1.876 billion, up from N827 million the previous year.

Significant growth in net foreign exchange gain also contributed to the bank’s earnings performance, with a rise to N3.766 billion from N2.485 billion in 2022 before the naira devaluation in 2023.

According to the financial statement available on its website, Nova Merchant Bank’s profit increased from N1.605 billion in 2021 to N3.096 billion in 2022. The bank distributed N1 billion in dividends to shareholders during the year.

Nova Merchant Bank’s largest shareholders include Phillip Oduoza, the chairman, who owns 50.494% of the company. Carbon Commodity DMCC holds 24.753% of the shares, while Five Star Associate Limited and Afriglobal Investment Holdings each own 12.377%.

The bank’s total assets grew from N244.217 billion in 2021 to N279.88 billion in 2022. As of December 2022, Nova Merchant Bank had N16 billion in share capital.

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