CBN grants FBN Holdings merchant banking licence

The Central Bank of Nigeria (CBN) has approved a merchant banking licence for FBN Holdings Plc, through its subsidiary, the Kakawa Discount House Ltd.
Bello Maccido, FBN Holdings Group chief executive officer, made announcement at the company’s third annual general meeting (AGM) held in Lagos.
He said that the final approval was granted to the company by the CBN on May 19, adding that the Kakawa Discount House applied for the licence in December 2014. Maccido said that the development would allow the company to use additional windows to sell investment banking products.
“To have a merchant banking licence will be beneficial to the shareholders in the medium to long-term,” Maccido said.
According to him, the licence would also leverage the company’s capacity to pay enhanced dividend to shareholders in the nearest future.
Maccido added that the company in 2014 increased its holding in the Kakawa Discount House to 100 percent from 46 percent.
There are currently two licenced merchant banks in the country, namely FSDH Merchant Bank Ltd and Rand Merchant Bank.
On the company’s low dividend for its 2014 operations, Maccido attributed the development to the significant reduction in dividend received from its subsidiaries, especially First Bank of Nigeria Plc.
He said that the company retained its profits because of the increased capital requirement of the CBN following the adoption of Basel 2 capital accord during the period under review.
Maccido said that the company lost N68 billion revenue in 2014 to cash reserve requirement (CRR) alone.
“FBN has reduced its pay-out ratio and retained a substantial portion of profit to boost capital which impacted the capacity of FBN Holdings to pay dividends,” Maccido said.
“With the retention of N79.6 billion, we are confident that the capital adequacy ratio (CAR) is adequate for business in the short to medium term,” he added.
Bisi Onasanya, FBN managing director, told the shareholders that the bank would be debited N64 billion by the CBN on May 21, as additional CRR.
Onasanya said that the bank would discount some of its treasury bills and bonds to cover up for the debited funds.
Earlier, Sunny Nwosu, national coordinator, Independent Shareholders Association of Nigeria (ISAN), commended the company for saving for the rainy day and higher future dividends.
Nwosu enjoined the company to ensure the payment of an interim dividend to augment the 10k dividend declared and the bonus of one for 10. He also commended the company’s management for avoiding contraventions and other penalties of regulators.
Boniface Okezie, president, Progressive Shareholders Association of Nigeria (PSAN), decried the various charges being paid with shareholders’ funds to CBN, the Assets Management Company of Nigeria (AMCON) and the Nigeria Deposit Insurance Corporation (NDIC).
Okezie said that the shareholders may be forced to challenge the various regulators in court to protect their investment.

Source : BusinessDay

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