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Sterling bank set to raise N 100 bn fresh Capital, gets shareholders’ nod

By Gabriel Omoh
Sterling Bank PLC has put measures in place to shore up its capital base in order to play in the big league of banks at national and international arena.

As a result, the bank is set to raise addition N100bn capital in the next few months.
Shareholders of the bank Plc, yesterday, sealed the bid for fresh capital by approving the decision of the board of directors to raise a fresh capital of up to N100bn.

The shareholders gave their nod at the 48th Annual General Meeting (AGM) of the bank in Calabar, Cross River State.

The board of the bank had proposed: “That additional capital of up to N100bn or its equivalent in foreign denominated currencies be raised through any or a combination of the following: equity, quasi-equity, convertible loans, and or any other debt equity by way of offer of subscription, whether foreign or local, to the general public with or without preferential allotment, or rights issue to the existing shareholders, or by a way of a special – private placing to a strategic investor(s) upon such terms and conditions to be determined by the directors and approval of the regulatory authorities.”

Commenting on the results of the bank for the year ended December 2009, the Chairman, Alhaji Suleiman Adegunwa, disclosed that in a bid to strengthen the market position of the bank and assure the long-term sustainability of the business, the management has proposed a number of initiatives for implementation in the current year.

These, according to him, include strengthening of the core capital position through an injection of equity.

In addition to this, management proposes to improve the efficiency of the working capital structure of the bank by tapping wholesale markets (domestic and offshore) for debts.

In his reports to the shareholders, Group Managing Director and Chief Executive of the Bank, Yemi Adeola, noted that last year was an extra-ordinarily challenging year for the banking sector with the second half characterised by extreme turbulence.

According to him, there are however, signs that the business environment is improving and confidence is gradually returning.

“We are beginning to witness a gradual return to risk appetite, which is a welcome development for customers and the economy.

“Our desire is to see double digit growth in our loan portfolio while keeping a lead on cost of funding to improve interest margins,” he said.

President, Association for the Rights of Nigerian Shareholders, Dr. Farouk Umar, commended the management of Sterling Bank for scaling through the last audit exercise jointly conducted by the Central Bank of Nigeria (CBN) and Nigeria Deposit Insurance Corporation (NDIC) in August last year.

He also lauded the banking watchdog for the ongoing reforms, stressing that the money lost by shareholders in the stock market would have been more if the CBN had not intervened.

President, Independent Shareholders Association of Nigeria, Sir Sunny Nwosu, however, criticised the CBN reforms.

According to him, “nobody is against the CBN reforms but the reforms must be carried out with due process. There are lots of money in the banks but nobody is willing to borrow the funds because CBN has criminalised borrowing,” he stressed.

He also advised management of Sterling Bank to consider rights issue in its fund raising exercise.

In his own reaction, another shareholder, Mr Nona Awoh, cautioned against turning AGMs into avenues for launching attacks at the CBN Governor and his policies.
He noted that Annual general meetings are supposed to be used to discuss issues affecting institutions.

Responding, Adeola, who thanked the shareholders for their interest in the bank, assured that the institution would raise N10bn via rights issue before the end of the year.

He also assured that Sterling Bank would make more profit this year, stressing, “the days of incurring losses are over.”

He said that all the subsidiaries of the bank are now doing very well, stressing that Sterling Bank made much progress in its loan recovery drive.

“We recovered N4bn between September and December 2009 and another N1.4 billion this year.”

The bank had in its filing to the Nigerian Stock Exchange last month, recorded a pre-tax loss of N11.63 billion against a profit of N6.28bn in the preceding year.

However, the bank posted a 137 per cent rise in pre-tax profit for its first quarter ended March 31, 2010 as it recorded N1.4bn compared with N592 m in profit in the preceding year.


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