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FinBank’s public offer in early 2008 sought to raise NGN100 billion on the Nigerian Stock Exchange. How successful was the hybrid offer? How will the new capitalisation be used?
The January 2008 capital raising exercise was conducted under three broad categories. We had subscription for 5,000,000,000 ordinary shares of 50k each at N9.50k, 4,000,000,000 irredeemable non-cumulative convertible preference shares and 968,863,000 ordinary shares by way of Rights Issue. The three categories of the offer were highly patronized and I can tell you in general terms that the Bank had a good outing since the offer was over subscribed.
In addressing the question of the utilization of the resources so raised, I want to draw your attention to the fact that when we contemplated going to raise the money, we, first of all, sought the consent of the shareholders. In doing that, management presented a proposal on how the money would be applied and it was on that basis that we were granted permission to go to the capital market.
For emphasis, the purpose of the offer is to finance our branch network, upgrade our information technology infrastructure, recapitalize and develop our subsidiaries and apply the balance as additional working capital.
What is the state of the financial sector in Nigeria at the moment, and what factors have led to its current situation? Can the sector sustain its current levels of growth?
The performance of Nigeria’s financial services sector both now and in the immediate future will continue to be benchmarked against the outcome of banks consolidation exercise. The most prominent outcome of the consolidation is the emergence of stronger banking institutions with capacity to focus on sectors that will ensure that economic growth is sustained over a very long period.
Before now, banks were seriously constrained by dearth of funds to play in major areas that define the economic status of any nation. But with increased capitalization, most banks are now playing in the oil and gas sector and other areas of the economy that demand huge capital with long-term amortization.
Another area is the facilitation of the emergence of the middle class. The middle class drives consumer products. If you have a middle class, it will drive production. Banks are going into consumer banking, retail banking etc. These help credit creation which, we hope, will boost the economy. To this extent, I am of the view that the current growth is sustainable.
For us as a country, the economy is doing quite well and we are optimistic that the growth will continue to get quite better. The major challenge now is the power infrastructure and it is expected that it will improve soon. It is also considered that the banking sector will benefit in an exponential manner if there are growth in other sectors.
FinBank plans to invest USD136 million in upgrading its information technology infrastructure in the next two years. Which areas of the bank’s information technology will be targeted for investment?
When we were to raise money from the capital market, part of our proposal was that about 17.86% of the offer proceeds will be spent on upgrading the bank’s information technology infrastructure. We had estimated that the completion period would be about 24months. That process has commenced. Currently, we have begun the implementation of FINACLE 7.0.18. The version we were using before is FINACLE 6.2.17. Add-on knowledge on the current version of our FINACLE was acquired by our staff during the administration and technical training, at India, last year.
We are also automating Trade Finance and Treasury Operations. All these are meant to enhance service delivery and support and make FINACLE application more user-friendly in order to enhance data processing. Other areas of IT will receive attention but it has to be in phases.
