By Alex C
Diamond Bank recently published the results of its $310 million rights issue, recording 100 percent subscription, as 8,685 million ordinary shares were issued, raising the bank’s current number of outstanding shares to 23.160 billion.
If the financial year 2013 published details on the potential additional shares from its convertible instruments were included, this adds 2.758 billion shares, which takes the bank’s fully diluted share count to about 25.918 billion.
“Overall, we believe this should be viewed as positive news for Diamond in an environment where macro concerns continue to dominate and capital regulations for the Nigerian banks have tightened significantly,” said Adesoji Solanke, vice president – banking analyst (SSA), at Renaissance Capital, saying “considering that Actis divested of its stake during the rights issue period, we look forward to seeing the post-rights shareholding structure and any updates on board composition.”
According to Solanke, the successful rights issue clears the capital overhang that surrounded Diamond Bank over the past 24 months. Diamond Bank management reported a 9M14 Basel 1 CAR of 16.9 percent, which drops to 13.5 percent under Basel 2/3.
“If the rights proceeds are factored in, CAR returns to c.17 percent, according to management. Management did not disclose its CBN composite risk rating owing to regulatory constraints, but noted that it remains in capital conservation mode. As such, it plans to retain as much capital as possible while slowing credit growth to 10-15 percent over the medium term, from its previous expectation of 20 percent,” Solanke added.