NBS Bank plc, a subsidiary of Nico Holdings Limited plc, has raised K11.8 billion (about $16.2 million) capital through rights issue, making it the largest undertaking in Malawi, after Mpico Limited.
Yesterday, the bank listed an additional 2.1 billion shares on the Malawi Stock Exchange (MSE), bringing the total number of issued shares in the bank to 2.9 billion.
Through the rights issue—issuing of rights to company’s existing shareholders—which opened on May 29 and closed on July 7 2017, NBS Bank issued over 2.18 billion new ordinary shares at K5.40 per share.
NBS Bank board chairperson Vizenge Kumwenda, who is also chief executive officer of Nico Holdings Limited, said this means the bank is now able to meet regulatory requirements of Basel II and return on its recovery path.
He said: “This means a lot to the bank that we needed to comply with regulatory requirements of Basel II and we were given a deadline of June 2017 which we have done.
“On top of that, our business was a bit constrained. We could not trade as we wanted particularly in lending business, but now we have to start doing that because we have the capacity,” he said.
Listed Mpico Limited rights issue raised K9 billion in rights issues early this year.
In year ended December 2016, NBS Bank posted a K4 billion loss, up from the previous year’s K195 million.
This was mainly on account of a drop in interest income and sharp increase in other operating expenses and bad loans.
After the rights issue, NBS Bank is now 50.1 percent owned by Nico Holdings Limited, Continental Holdings with 19.9 percent, National Bank of Malawi 7.5 the public owns 22.3 percent.
Since December 2015, NBS Bank has been struggling to meet the minimum capital requirement under Basel II, a directive that requires that banks’ Tier 1 capital and total capital ratio be at 10 percent and 15 percent respectively.
Lead financial advisers for the transaction were CDH Investment Bank (CDHIB) and its chief executive officer Misheck Esau said the success of the capital raise is an indication that higher capital requirements can be met through the capital market.
MSE chief executive officer John Kamanga said the listing of the NBS Bank rights issue shares will offer liquidity on the market and is also a confidence booster for the local bourse.
During yesterday’s trading on MSE, there was huge demand for NBS Bank stock, whose share price picked at K6.50 per share.
Minority Shareholders Association of Malawi secretary Frank Harawa said although there has been little participation of minority shareholders because of the limited time, they hope the company would be on track now.