Ecobank to raise USD400 million to take care of bad loans

Thomas Cook

As a fall out of its full year result which showed the bank suffered USD204 million in loss, Ecobank Transnational Corporation, parent company of Ecobank will be doing another capital raising.

The bank’s Chief Executive Ade Adeyemi disclosed in a letter to shareholders that the bank will seek to raise USD400 million via a convertible bond issue at 6.46 percent above Libor.

He said the bank has already received commitments from investors. While not giving specifics, Ade Adeyemi said Qatar National Bank, Nedbank, South Africa’s PIC and World Bank’s IFC, were still supporting the business both with capital and market access.

The bank said it will earmark USD200 million to repay loans used in acquiring bad banks and repair its debt profile.

However, Nedbank, the largest shareholder in Ecobank said it will not participate in the capital raising.

The bank is making less profit from Nigeria, its largest market where a weaker oil price has led to huge inflation and high level of credit default in the corporate banking sector.

With huge impairments on its neck and a credit adequacy ratio that can go below the Central Bank of Nigeria’s 15% benchmark, the bond issuance will go a long way to stabilise the bank.

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