Shareholders of Sterling Bank Plc have explained why they gave directors of the bank to nod to raise additional capital. The decision, which they said, was down to the high level of confidence they have in the Board and Management of the bank, was taken at the extra-ordinary general meeting, EGM, held in Lagos last week. The bank’s shareholders approved a private placement of N20 billion through the issuance of 7.47 billion shares to Silverlake Investments Limited, an investor based in Mauritius. They also approved the request of the directors to raise additional capital up to $200 million through any or a combination of equity, global depository receipts, public offering or rights issue, so as to boost operations and yield sustainable returns on investments.

Sunny Nwosu, the national coordinator of the Independent Shareholders Association of Nigeria, ISAN, said the shareholders supported the idea of raising fresh funds to enhance the bank’s capacity to engage in more business to increase profit margin and attain enhanced dividend payment. “With an enhanced capital, Sterling Bank will be able to go into big ticket transactions dominated by big banks because of their level of capitalization. The time has come for Sterling Bank to join the league of big banks and have an increased share of the market,” said Nwosu.

Godwin Anono of the Nigeria Professional Shareholders Association said the shareholders were in support of the capital-raising programme, as the exercise would enable the Bank to compete effectively in the industry. Similarly, Olubunmi Ishola, a Sterling Bank shareholder from Ibadan, noted that the judicious application of the existing capital by the directors have endeared the Bank to the shareholders to approve the injection of fresh funds to enable the Bank to explore more business opportunities.

For nine months ended September 30, 2014, Sterling Bank Plc recently grew its profit before tax by 41 per cent. Profit before tax grew from N6.02 billion to N8.50 billion in 2014 while profit after tax rose from N5.07 billion to N7.06 billion. The bank’s pre-tax profit margin rose from 9.24 per cent in third quarter 2013 to 11.6 per cent in September 2014.

According to management of the bank, Sterling Bank’s capital raising exercise would be accelerated and completed before the end of 2014. This is targeted so that the bank can start the year 2015 as a well-capitalised bank and raise its capital adequacy ratio in line with the requirements of Central Bank of Nigeria, CBN.