First Bank has said it would seek shareholders’ approval to transfer its subsidiaries to a new holding company, (HoldCo) in order to meet regulation that risky capital market business be kept separate from retail and regular banking business.
The Central Bank of Nigeria (CBN) two years ago directed lenders to either sell their stakes in subsidiaries involved in activities including insurance, asset management, capital market and investment banking or adopt a holding company structure, where those activities are separate from the holding of retail deposits.
In doing so, it aimed to prevent depositors’ funds from being used to speculate in the capital market, to avoid a repeat of the near collapse of several overleveraged banks in the 2009 financial crisis.
The bank said it would ask shareholders on Sept. 24 to approve the transfer of the assets of its subsidiaries into a holding company called FBN Holdings Plc, including its capital market and asset management units.
It will subsequently delist the bank from the Nigerian Stock Exchange, it said in a notice to shareholders, who will get stakes in the new entity equivalent to their existing holdings.
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