The Central Bank of Nigeria (CBN) has approved a merchant banking licence for FBN Holdings Plc, through its subsidiary, the Kakawa Discount House Ltd.
Mr. Bello Maccido, FBN Holdings Group Chief Executive Officer, made the announcement at the company’s 3rd Annual General Meeting (AGM) held in Lagos last week.
He said 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 the development would allow the company to use additional windows to sell investment banking products.
He said: “To have a merchant banking licence will be beneficial to the shareholders in the medium to long-term”.
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 per cent from 46 per cent.
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 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 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.
He added that, “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.
However, Mr. 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 the bank would discount some of its treasury bills and bonds to cover up for the debited funds.
Earlier, Mr 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.
Mr. 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 the shareholders may be forced to challenge the various regulators in court, to protect their investment.
He said that shareholders were being short-changed by the regulators, noting that FBN Holdings shareholders would had received higher dividends and not 10k, if not for charges paid to the regulators.
“It is time to wake up and challenge CBN and AMCON, etc. Our regulators are reckless and impunity is becoming too much in the system,” Okezie said.
The company posted gross earnings of N480.6 billion for the financial year ended Dec. 31, 2014 against the N396.2 billion recorded in the comparative period of 2013.
Profit before tax stood at N92.9 billion, compared with the N91.3 billion in 2013, while profit after tax rose to N82.8 billion, against the N70.6 billion in 2013, an increase of 17.3 per cent.
The company declared a dividend of 10k per share and a bonus of one for 10 to its shareholders, in contrast to the N1.1 dividend per share paid in 2014.