Nigerian Banks Engage in Capital Race as Insiders Invest Heavily
Nigeria’s leading financial institutions are currently embroiled in a vigorous campaign to bolster their capital reserves. What sets this wave of capital raising apart is the prominent role of internal stakeholders. Senior executives and influential figures within these Tier-1 banks are actively deploying personal and corporate funds to acquire more shares, consolidate their control, and support substantial capital-raising initiatives. This strategic manoeuvre is unfolding ahead of a critical regulatory deadline that is poised to reshape the landscape of the Nigerian banking sector.
The impetus for this intensified activity stems from a directive issued by the Central Bank of Nigeria (CBN). Banks holding international licences are now mandated to increase their minimum capital base to ₦500 billion by April 2026. What began as a regulatory compliance exercise has rapidly evolved into a multifaceted contest for market dominance, enhanced credibility, and sustained long-term profitability within Africa’s largest economy.
A recent illustration of this trend occurred when shareholders of Access Holdings Plc gave their endorsement to a plan aimed at raising up to ₦40 billion through a private placement. A private placement involves the direct sale of stock to a select group of investors, such as institutions or high-net-worth individuals, bypassing the broader public market. This method offers advantages like expedited capital acquisition, reduced regulatory scrutiny, and lower associated costs compared to an Initial Public Offering (IPO), albeit with restrictions on share liquidity.
The approval for Access Holdings’ private placement was granted at an Extraordinary General Meeting (EGM) held on December 18. The resolution empowers the board to issue nearly two billion new ordinary shares at an initial price of ₦20.25 per share, or at an alternative price determined by the board, to pre-selected investors.
While such resolutions are not uncommon during periods of recapitalisation, market observers note that this particular instance signifies a more profound strategic shift. Bank boards and their top management are no longer content with merely approaching the market for funding. Their objective now is to actively shape the capital-raising process, attract strategic investors, preserve their influence, and simultaneously position themselves to benefit from future growth trajectories.
Consequently, insider share purchases have witnessed a significant uptick across the banking sector. This surge is attributed to the understanding that contemporary capital raising is not solely about meeting regulatory mandates; it is fundamentally about determining who will control the balance sheet and wield decision-making power in the coming years.
This heightened internal confidence is underpinned by robust financial performance. Nigeria’s Tier-1 banks have experienced an exceptional profit cycle over the past two years. Sector-wide Return on Equity (ROE) for 2025 is projected to range between 20% and 25%. Although this represents a slight decrease from the nearly 30% ROE recorded in 2023 and 2024, it remains exceptionally high when compared to benchmarks in emerging markets.
Several factors have contributed to this strong earnings performance, including elevated interest rates, improved loan pricing strategies, and increased revenue generated from government securities. The financial figures provide compelling evidence:
- Zenith Bank: Reported a profit after tax of ₦679.9 billion in 2024, marking a substantial 202% year-on-year increase.
- United Bank for Africa (UBA): Achieved a profit of ₦607 billion, a remarkable 257% rise.
- Access Bank: Posted profits of ₦612.4 billion, nearly a 300% increase compared to the previous year.
For bank executives overseeing these impressive profit levels, acquiring additional shares represents a dual strategy: a public display of confidence and a calculated financial investment. Many insiders perceive bank stocks as undervalued relative to their earning potential, particularly in anticipation of recapitalisation enabling larger loan portfolios, higher single-obligor limits, and broader regional expansion.
Perhaps the most telling indicator of this insider trend is the recent significant acquisition by billionaire investor and chairman of First HoldCo Plc, Mr. Femi Otedola. On December 18, he invested approximately ₦14.8 billion to purchase nearly 370 million units of shares at ₦40.06 each, through his investment vehicle, Calvados Global Services Limited.
Following this transaction, Mr. Otedola’s aggregate direct and indirect shareholding in First HoldCo increased to approximately 17.56%, up from 16.1% in September. The market reacted swiftly, with the bank’s share price surging by 7.7% to close at ₦42.65 on the day the acquisition was disclosed. First HoldCo’s market capitalisation has since climbed to around ₦1.84 trillion, reflecting a 52% gain year-to-date.
Market analysts interpret this move as a clear signal. Mr. Otedola is not only demonstrating unwavering support for the bank but is also strategically fortifying his control during a period when ownership structures are of paramount importance. With recapitalisation underway, the presence of a strong and committed core shareholder serves to mitigate risk and instil confidence in other investors.
Zenith Bank has also witnessed a similar surge in insider confidence. Dr. Adaora Umeoji, its Chief Executive Officer and Group Managing Director, recently purchased 11 million shares valued at approximately ₦732.6 million. Market observers view this purchase as a potent endorsement of management’s conviction in the bank’s inherent strength and its projected future earnings.
These insider purchases serve multiple strategic objectives:
- Market Reassurance: They signal to the market that management anticipates sustained profitability, even if ROE moderates from its recent peak.
- Shareholder Alignment: They foster a closer alignment between executive interests and those of shareholders, particularly at a time when concerns about potential dilution from new share issuances are prevalent.
Beyond individual insider investments, bank boards are meticulously designing substantial capital raises to secure long-term competitive advantages. Access Holdings, for instance, has already successfully raised ₦365 billion through a rights issue that saw strong subscription rates, comfortably exceeding the ₦500 billion capital requirement. Zenith Bank followed suit by raising over ₦350 billion in new equity, while Stanbic IBTC Holdings also surpassed the threshold, benefiting from the backing of its parent company, Standard Bank of South Africa.
FCMB Group Plc has embarked on an even more ambitious capital-raising endeavour. Its shareholders recently approved plans to secure up to ₦400 billion in fresh capital, a move designed to ensure compliance with regulatory requirements well in advance of the March 2026 deadline. Management has indicated that these funds will enhance capital adequacy, reduce reliance on expensive deposits, and accelerate digital and international expansion initiatives. The group anticipates a more than 50% increase in earnings per share over the next two years as a result.
In today’s dynamic Nigerian financial environment, being classified as a Tier-1 bank extends beyond mere size. It now encompasses the critical ability to raise capital rapidly, cultivate investor trust, and effectively deploy funds for profitable ventures across both domestic and international markets, as well as through digital platforms.
As regulatory pressures continue to mount, bank executives are stepping forward not only in their managerial capacities but also as significant investors. By committing their personal and corporate resources to share acquisitions and capital-raising exercises, they are actively securing their influence, supporting asset valuations, and strategically positioning themselves for the next phase of industry growth.
In an industry characterised by high profitability and intense competition, ownership is increasingly becoming the determinant of future success. Nigeria’s banking leaders are making it unequivocally clear that they intend to be the architects and owners of the future they are diligently building.
