By; PETER NOSAKHARE, Kaduna
Most Financial institutions in the country have started raising capital base and they say they will allocate, 1.20 billion dollars from the proceeds to invest in technology and bolster their cybersecurity infrastructure.
This was indicated in the offer prospectus of five lenders that have commenced their capital raise, to meet the new capital requirement of the Central Bank of Nigeria (CBN).
In late March, the CBN announced new capital requirements for the banks operating in the country.
The apex bank directed commercial banks with international authorisation to increase their capital base to 500 billion Naira, national banks to 200 billion Naira and those with regional authorisation were expected to achieve a 50 billion Naira capital floor.
CBN had two years ago, given banks order to raise their capital base to achieve the target and three options: raising additional capital, mergers and acquisitions, and licence upgrade or downgrades.
“According to PwC, there is a significant capital shortfall of 4.2 trillion Naira across all licence categories, as much as between 35 per cent and per cent of the new minimum capital.”
An analysis of the offering documents showed that Guaranty Trust Holding Company (GTCO), had budgeted the highest amount to be invested in technology.
GTCO offered nine billion ordinary shares of 50 each at 44.50 Naira per share with the intent to raise about 400.50 billion Naira.
Of its net proceeds of 392.49 billion Naira, the holding company said 94.3 per cent of the proceeds (N370bn) would go towards the recapitalisation of its banking subsidiary, GTBank, while the remaining 5.7 per cent would be on the acquisition of pension fund administration and asset management businesses.
The offer document revealed that GTBank intends to spend 98.50 billion Naira (26.6 per cent) of the net offer proceeds on technology infrastructure upgrades, with a majority of it going towards, “Core banking application implementation, associated hardware infrastructure, network architecture, and ancillary costs related to optimisation of data centre/disaster recovery centre.”
Meanwhile, information security & fraud prevention and detection software get about 15 billion Naira (4.1 per cent) of the net proceeds.
Access Holdings indicated that 20 per cent of the net proceeds from its rights offer ( 343.09 billion Naira) would be invested in IT infrastructure upgrades and development.
About 41.17 billion Naira would be invested in network infrastructure and 27.48 billion Naira in cybersecurity capabilities, bringing the total spend on IT to 68.62 billion Naira.
A significant portion of the net proceeds would go towards local and international business expansion (223.01 billion Naira).
Zenith Bank Plc said that the proceeds of its offering would “enable the bank to conclude the overhaul of its information technology infrastructure and provide additional working capital to support its expanding operations and enable the Bank to take maximum advantage of emerging opportunities”.
For investment in technology, Zenith Bank noted that it would spend about 20 per cent of the net proceeds, 99.27 billion Naira which amounts to 19.85 billion Naira.
A breakdown showed that Zenith Bank planned to spend 8.93 billion Naira on computer hardware/servers, 3.97 billion Naira each on software licences, registration and network infrastructure upgrades and another 2.98 billion Naira on cybersecurity architecture/software.
Fidelity Bank, which has closed its offering, planned to invest about 19.01 billion Naira in IT infrastructure, which is about 20 per cent of the net proceeds from the offering.
The bank, which raised about 127 billion Naira in its combined offer, said that it intended to invest 9.03 billion Naira in cybersecurity capabilities, 7.60 billion Naira in software licences and hardware and 2.38 billion Naira as additional investment in its network infrastructure.
Of the five banks reviewed, First City Monument Bank Group, FCMB, has the least amount budgeted for technology at 16.22 billion Naira (15 per cent of the net proceeds). About 11 billion Naira n would go to upgrade its information technology infrastructure and 5.23 billion Naira towards investment in cybersecurity capabilities.
Fresh budgets for IT infrastructure are being allocated amid a recent surge in attacks on banks’ technology infrastructure, resulting in financial losses and subsequent legal actions.
Also, days ago, GT Bank confirmed that there was an attempt to compromise its website, which left customers unable to access online services.
The bank, in a mail, reassured its customers that the hacking attempt was not successful and that its website was not cloned.
“While there was an isolated incident of an attempt to compromise our website domain, we would like to reassure our customers and stakeholders that the bank’s website has not been cloned and that we do not store customer information on our website, and as such, there has been no instance of compromise of customer data,” GTB said in the statement.
The International Monetary Fund’s Global Financial Stability Report in April, 2024, indicated that the risk of extreme losses from cyber incidents was increasing.
“Such losses could potentially cause funding problems for companies and even jeopardise their solvency. The size of these extreme losses has more than quadrupled since 2017 to 2.5 billion dollars and indirect losses like reputational damage or security upgrades are substantially higher,” another International Monetary Fund, IMF, report said.
Meanwhile, the reviewed banks intend to spend about 22.94 billion Naira on the offer costs to raise a combined 1.06 trillion Naira.
Offer costs include all costs, expenses and taxes on them, stamp duty, spending on underwriting, legal, accounting, printing, distribution, filing and registration fees, marketing and advertising expenses and other miscellaneous expenses.
