By Alex C
FCMB Group Plc, which bought over bailed-out FinBank Plc in 2011 following a debt crisis in 2009, has suspended a planned Eurobond sale, and instead opted to borrow funds from a group of banks. FCMB borrowed $300 million from international lenders at an average interest rate of 4 percent, “below the Eurobond’s rate,” the bank said in a statement.
The bank is planning to raise 30 billion Naira ($182 million) through a sale of seven-year bonds to strengthen its capital base and expand assets. The Central Bank of Nigeria notified lenders in August 2014 they could no longer count certain assets as capital as the country implements tougher Basel standards for banks. The Apex Bank also limited Tier-2 capital to 33 percent of higher-quality Tier-1 capital.
FCMB intends to rise lending to customers by about 20 percent to 540 billion Naira in 2014, joining local rivals in raising funds to expand credit to consumers and finance infrastructure projects in Africa’s largest economy, Ladi Balogun, Chief Executive Officer, FCMB revealed said.
The loans arranged with international lenders, which have terms of two to eight years, will provide lending to telecommunications, power and infrastructure projects. The providers include International Finance Corp., Citigroup Inc, Overseas Private Investment Corp. and the European Investment Bank, it said.
FCMB’s first-half profit rose 3 percent from a year earlier to 9.58 billion Naira. Net interest income rose 20 percent to 32.36 billion Naira as the bank is targeting a return on equity of 15 percent this year and 20 percent in 2016, compared with 13 percent in 2013.