Ecobank Considers Sale Of Stake In Nigerian Unit

Albert-EssienEcobank Transnational Inc. is considering selling a stake in its Nigerian subsidiary as part of a plan to raise about $500 million of equity for the unit.

“It’s possible that could happen,” Chief Executive Officer Albert Essien said about selling part of Ecobank Nigeria.

Speaking in an interview with the Bloomberg via telephone in Abidjan, said “There’s a board policy that we could, if we wanted, sell down and hold 75 per cent in our subsidiaries.”

ETI, which operates in 36 African countries, needs to increase the capital of Ecobank Nigeria, its biggest subsidiary, by March next year to meet new rules from the Central Bank of Nigeria.

“A $500 million boost would take its capital-adequacy ratio to about 18 percent, above the minimum requirement of 16 per cent, Jibril Aku, managing director of Ecobank Nigeria Ltd., said on November 14.

ETI has transferred to Ecobank Nigeria the “larger portion” of the $206 million in cash it received in October when South Africa’s Nedbank Group Ltd. bought a 20 percent stake in ETI,

The rest of Ecobank Nigeria’s capital needs will come from retained earnings and a “private placement” of equity.

Ecobank Nigeria, which had $9.6 billion of assets at the end of September, is the country’s seventh-biggest lender. It made a $157 million post-tax profit in the first nine months, up 79 per cent from a year earlier, according to a presentation posted on ETI’s website.

“The rest of the money from Nedbank’s acquisition has been put toward other subsidiaries, including Ecobank Kenya, Essien said.

“We know that some might need capital down the line,” he said in a separate interview in Abidjan yesterday. “They do for regulatory purposes and sometimes for business purposes,” he said.

ETI’s rules prevent any institution from buying more than 24.99 percent of its shares and it prefers none to hold more than 20 percent to ensure a broad shareholder base, said Essien.

“The policy of keeping everybody at 20 per cent is for diversification of shareholding,” he said.

ETI has a $23 billion balance sheet and its stock trades in Ghana, Ivory Coast and Nigeria. Its shares fell 1.2 per cent to 17 naira last week, giving it a market capitalisation of 384 billion naira ($2.2 billion).

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