Wema Bank Moves To Reorganise Capital, Calls For EGM

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By Nse Anthony-Uko
(Sundiata Finance) – In a drive to position the bank for efficiency and on share price patronage, Wema Bank Plc is set to embark on capital reorganisation and resolve negative retained earnings.

The bank that was granted a national license by Central Bank of Nigeria (CBN) in 2015 as at June 30, 2017 has negative retained earnings of N36.76 billion as against N39.2 billion reported in 2016.

The bank will be seeking the consent of its Shareholders at an Extra-Ordinary General Meeting (EGM) in a comprehensive Scheme of Capital Reduction pursuant to the procedures set out in Sections 105, 106, 107, 108, 120 of CAMA and Rules 4(d), 4(g) and 5(4) of the Company Proceedings Rules 1992.

Managing director, Wema Bank Plc, Mr. Segun Oloketuyi, in a statement, said, capital reduction scheme would have no impact on Shareholders, while an equivalent amount will be moved from share premium account to effectively close the entries.

According to him, “Having been transformed to one of the leading banks within the Retail Banking space, Wema Bank with its national authorization has reemerged a stronger, more efficient, resilient and customer-focused organization with a robust risk and governance structure.

“A review of Wema Bank’s financials reveals the carrying of a negative retained earnings balance, which arose from losses prior to June 2009 when the current management assumed office.

“Though the Bank has since returned to profitability in the last four years, the implication of negative Retained Earnings and other impaired assets is that, the Bank, by regulation, is precluded from providing necessary returns to providers of capital and most importantly, restricts the ability and cost to raise new capital.

“The holistic capital reduction scheme would have no impact to the current holdings of Shareholders, though the Bank will be creating a capital reduction account to charge off the impaired assets while an equivalent amount will be moved from its share premium account to effectively close the entries.

“Following the consent of the Shareholders, the Bank will subsequently make an application to the Federal High Court for the approval of the scheme.

He explained that, “Wema Bank continues to on its performance, despite the relatively challenging environment. Furthermore, the Bank has recorded successes in several financial and non-financial priorities specifically, Wema Bank’s growth strategy – Project LEAP – revolves around a blended approach involving partnership, growing branch network and digitization. This was strengthened by the May 2017 launch of ALAT – Nigeria’s first fully digital Bank. ALAT is the first of its kind with its end-to-end digital offering and customer interaction

Wema Bank has its National Long Term Rating affirmed at (BBB-) by Fitch and Global Credit Rating (GCR), both leading credit rating and research agencies with its Non-Performing Loans (NPLs), Capital Adequacy Ratio and Liquidity Ratio all within the regulatory threshold.