By NKIRUKA NNOROM

Wema Bank Plc is faced with the risk of being delisted from the Nigerian Stock Exchange, NSE, Daily Official List ,over its failure to increase the percentage of its public float to the regulatory required standard.

Nigerian Stock Exchange

Public float is the amount of shares the promoter(s) of any company seeking listing on the Exchange is required to sell to members of the public to qualify for listing.

This refers to the number of shares held by ordinary shareholders other than those held by parent, subsidiary or associate companies, directors or their family members, or any individual or institution holding more than a five percent stake.

The free float requirement for companies on the Main Board of the NSE is 20 percent, while that of companies in the Alternative Securities Market, ASeM, is 15 percent. Before the revision of the NSE’ listing rule, the public float was 25 percent for both main board and ASeM market respectively.

Companies deficient in free float requirement are, therefore, expected to free up more of their ordinary shares to the investing public to allow an orderly market and pricing on their shares.

However, information available to Financial Vanguard showed that Wema Bank’s free float presently stands at 19.64 percent, falling short of the regulatory requirement by 0.37 basis points. The bank has been given up to July 30, 2014 (less than two weeks) to regularise its status.

According to information on the NSE’s website, companies listed on the Exchange are expected to maintain a minimum free float for the set standards under which they are listed in order to ensure that there is an orderly and liquid market in their securities. It noted that Wema Bank as well as other companies identified to be deficient in the percentage of their public float had applied for waivers from the Quotations Committee of Management and specifically provided compliance plans with tentative timelines to support their requests.

The Quotations Committee of Management considered and approved an extended timeframe for the companies to regain compliance with the listing requirement.

The Exchange has it that the companies are required to provide quarterly disclosure reports detailing their level of implementation of the compliance plans,but available data showed no such information against any of the companies, including Wema Bank.

It will be recalled that Wema Bank had at the last annual general meeting secured shareholders approval to raise fresh capital in order to support its growth plan.

The Managing Director/CEO, Mr. Segun Oloketuyi, who addressed shareholders at the meeting said that raising fresh capital will help the bank to increase its lending capacity, and to also pursue its growth plan.

He explained that most of the bank’s businesses require lending and it needed more money to be able to do that. “Also, any asset we acquire or any branch we open takes away from our capital, so we need additional capital to be able to do this. “To lend, we need capacity and this entails having enough capital adequacy ratio. The CBN also recommends that we have a buffer; that means having capital adequacy ratio above the 10 percent industry requirement,” he said.

The company released its financial statement for six months ended June 30, 2014 with pretax profit rising by N1.7 billion from N464.7 million in the same period last year.

Gross earnings rose to N12.5 billion during the six months as against N10 billion in the preceding period.