 Welcome back from that report we're staying on the banking sector for today The last time the CBA increased capital base for banks was in 2005 when the current a number of state capital Charles Saludo was the apex bank chief the capital base was raised from 2 billion to 25 billion to enable banks meets the new Minimum capital requirement the CBA and there's the edge banks to consider to inject fresh equity capital through private placements rights issues and or offers for subscription Merges and acquisitions and or upgrade or downgrade of licensed authorization The apex also apex bank rather also said the new minimum capital shall comprise paid-up capital and share premium only It stressed that the new capital requirements are not be based on the shareholders funds My guests Ambrose O'Modion is the chief research officer at the invest data consultant limited Ambrose is a well-respected investment and company analyst with over 20 years of experience He is known for his work as an equities analyst his training sessions for Investors and his weekly webinars. He is also a prominent expert on the Nigerian capital market Providing analysis and insights to investors the government and the market regulators Ambrose O'Modion joins me now to discuss the recent development and earnings of banks. Good morning to you Ambrose Good morning. Thanks for having me. It is our pleasure first things first Ambrose What were your initial reactions to this begging when Denise broke yesterday? Yeah, it's longer. No, I wouldn't be expecting it for more than 30 to six months now from September to date Oh, it's good that the CBA came out yesterday to make it clear that this is their direction I'm put to believe that they've done the right thing anywhere in the world No CPN has a interest of the economy because they may be sure that drive economy at any time any day with this They are thinking now want to survive a bank at any time drive the economy to work to one $3,000 that way and not to take it to be for me It's a good one for if you know this I think that there's no party or needs to put up if you want to be shorting You got to be look at the you know the announcement We're confined for anywhere in the world. We are looking at the bank's No capital is we thought as to do know they are in any which I was saying in this one but to go back to the fight on and see say doing a Capacity of it is a little all this goes with a part of it was so in food made from almost a note 82 banks bringing up to life with two bands after which is who want that direction also for now that we are saying that They think any it's not that any brandy world No, we think any is part of what they would ask for a couple of any bank base that capital That means if you know your Your the liability man of your capital asset you get to work for your net asset it's also your But it is a split it also the bounce also struggle to kind of a meet up debate But I believe that they are across the world. I've seen different company different nation You don't explain your it a ns for bands are different categories. It's also what I've done here No, they want you to get it a with different formula It is not done on the way to go about what you have capital not if I mention a no ratio or the question These are the things that the question Oh Because we'll come about for this one are coming out. Yes. No, it's doing everything and it's you already So they didn't do the shareholders of this company that deny themselves for many years not collecting all the profits from work on the bank So we invest in it to the bank. It's part of what they have their way now Also, we are coming back to the public work with them for another round of work public This is the one to invest again. That means next time and we don't make money also at the end of the day Yeah, it's a ns for the past. It's not considered for me I think this area that will be looking at yes, if you and I would say they are they are wrong They are they are great or they understand the rainbow ideally across the world It is not done for you. This was seen for the first time. I'm trying to see where you don't know remove Your you'll take any away from your capital, but I believe that is part of it Oh, no, we're supposed to see more No Okay, let's try and green and gain more traction as let's try and get Now you will agree with me that the back-end sector is comparatively doing well So the speaker the NGX with an impressive closing Figo as at the last day of closing Yesterday, I don't know if my director can just blast some of the NGS figures that we have, you know Two banks really come to mind them access bank is at the top right now It's the new management and all of that but right now. I also see another bank, too With a female, you know CEO there that's fidelity bank Also standing out per se, you know, how do you see them playing out in the wake of all of this? Do you see a Cup recapitalization in the offering or what exactly do you think about the earnings and all of that? For them to have more capital to do more business that's a very capitalized drive They want to learn a no expectation of an economy for now Our banks are heavy and strong for what we're going to do now We tell our directors to make them stronger and better. Well, if you look at the bank, I don't mention our assets and fidelity I say yes, they are moving Opposite direction, you know that is fidelity for me It is a second tier for now with their performance was given coming out And then now that we're still in many second tier but they are the leader in that second tier Why access for his police also ready if they step on for looking at the new capital, you know The base we are looking at I believe that they're already on the on the right direction They've done private placement before now. Also, they are planning to drive each one All this will also help them to achieve the the capital requirement for them to do more But I believe that also like I mentioned earlier that the system about you know that these bands are going back to the public to ask for No, I don't like issue or no If you think any of this bank that the children about food are not considered I think for me, it's then they cannot be taken out to tell that And that also might not pay the bank or isn't going for a less Everything between now and the two years time was now have almost a few years There's no window to the capital life in the process. I think Also Direction fine Well, I believe that they should be banked. You cannot well know who the environment to work with the capital that you get Who support your bank? All right, you mentioned access bank being a tier one being at the top of on the pyramid in terms of You know the capitalization at some the ngx, but let's talk about fidelity talked about them He then been a tier two bank, you know, I'm looking at him the survival of banks and them, you know Interest in terms of on people, you know Subscribing to their public offers and you know trying to invest that what can really Sustain and then in terms of them what they have done or are doing over time to ensure that they meet up with their expansion plans I hear they are trying to expand and all of that No, for pity, I think they are on the right track for now We have seen a recent performance for almost the past 10 years. I know recently the last four years I've seen a dramatic improvement in their performance Pressing the if you make a way the MD came on board that really made a different In terms of the ownership of that knowledge that because you cannot go down with that performance We're sure that the bank is doing well so that the bank also edit But they are also taking steps to know that they expand their work They are tentacle by trying to move outside the shop Nigeria acquiring a No, no, you know, you know about you can also move to go to Africa country Which is good for I believe that it is all for them to put their work your bottom line Oh, you put your foot online need to show more than you want to capitalize for me They are already in the right track the performance will speak for them. I know so your business model is a band That's what I call them a no a trader and Export their food cause why because they are going to try to Set up the economy that oil if it's not really Really, there's no tree that is not a product that our economy is to be taking but if that's one of that angle They think of freedom that are bringing in our important media in Nigeria. Also, it's a protest I also have an advantage of what they are funding for me is a good one And if you guys plan to do that, that was also for them One thing is that it's been personal, you know, we're a nice big money And that is why for banks that are like Deleted banks, they are taking culture that is great to start picking up because one they have already You know giving us a signal or a point out where they are going and I believe that to get that world the management team As part of the owners of this bank to go to their know the book of this bank So that most of them are part of that and where your partner You take it at your own business All the big companies today in Nigeria look at the personality behind them If you say kind of personality has been actually going to work going places All right, let's do talk about the general and field right now because I remember back in You know about 19 years ago when this for the first talk of them capitalization Was done lots of banks were panicky and I just was saying that that's how would know who the main players And the active players and who is strong and who is not strong, you know But right now we're going to see another round of maybe mergers and acquisition. You also talked about renewed capital market activity by banks, but you talked about Acquisition of Union Bank UK. Can you tell me more about that? Is it like a big? Dream or what do you really think? Anybody and high quality good dollar know or spam or pounds or something that for me is a good one I'm also sure that the bank has a particular for kind bigger business And I was why I love the move of central bank So for the bank will solidify by reason more capital that it can do bigger business only that the manner and the way For the first time I'm saying that you are moving To any point the bank person will know that most people I mean because most of the banks already as to speak now As you might have the most part, we don't have the sense of, you know, share that one. So how about, you know, above trillion, if that is being taken away, I hope to put advance onwards on the price, you know, on the pre-game. But don't forget that I can't take it as really pretty now, that most of the shareholders are going back to them, and they are the ones that also have proof to be taken, because out of their earnings, they pay the little or some precious work, going to investors, and the things that I want to expand the business to impact, you know, for me, if they're taking it away, that's why I said between now and the next few years that they're going to recover from this much to this much, I think there's more proof and we'll know better. So I believe that for people who are expanding outside Africa, outside the Nigeria, South Africa, Kansai, or UK, it's a good move for them also to increase their work, their personal life, and also strengthen what the banks are pushing. All right, Amonio, let's still look at other facts as it is right now, because I don't know in your opinion, do you see some banks going on that, those that cannot really meet up with this requirement, because for the NGX and banking indices, AXS Co is there, you know, at the top of the pyramid, but we'll talk of other good banks, GT Bank is there. For Fidelity, they can boast of strong financial performance, efficient management, commitment to sustainability, market presence, and you talked about them focusing on the market, and some people, I wouldn't say it's like an evil bank as it were, we tell lots of people, bank business and traders, banking there, but what would banks really need to do for those that may not be able to get this mergers or acquisition, like Fidelity is doing with the Union Bank, and AXS Co, you know, broadening its management team? No, for me, if you look at the pyramid, I would say that AXS Co is leading, followed by the Zinnish Bank for AXS Co. For me, we are already seeing that they are categorized. If a bank leader here is who can't go on with it, we can also apply for lower AXS, for you to stay business, for AXS Co. for major and acquisition, for bigger ones, if you see that here, if you are going to people, if you are going to march, you have to acquire easy time to do it. As I mentioned earlier, during this little time, we were about 82 banks in Nigeria, then after the government was changed to about 22, today, we were about 18 or 22, or around the same time, for me, it's a good one. This time, I don't know what to choose for, because we are seeing another bank in Nigeria, we are seeing a few interest free banks in Nigeria, or you see three interest free banks in Nigeria already, we see those that are also regional banks, some are also national banks, for me, it's a time for them to see where they can come together to become better and stronger. Also, don't forget that the government is also going to change the structure of the ownership of the banks. I think I'm going to dilute the shareholding structure of the banks, and at the same time, the earnings of the banks, because if you are going to raise more capital, then you need to double your work, your performance, because if you are raising more capital, you are increasing your share in each issue. Now that we are saying that we are recognizing share capital and premium forward for capital agreements, we need more. And it's all going to go for a public offer, like each next time we are spending your work, we are sharing each issue. You should also go to dilute your earnings by the end of the board. The banks, this time, I'm not afraid because to look at the policy of the CBN, and in another way, it's indirectly after calling the work, the banks and other financial institutions. I believe that the bank is set for this, for the way you go is what I know that most of the banks think that whether we go for margin, or we go for to take a lower license, or we also will get more money from the public. The banks will decide where they are going. All right. Just before we let you go on Ambrose Omodion, let's talk about management structure, because they actually play a whole lot of role in terms of investors' interest. And of course, the people who would actually want to participate in public offers and maybe write issues and all of that. For some banks now, they have taken the bull by the horns of people who say women are better economic managers. Banks like Axis Bank, Banker like Mzennet, and of course, even the Fidelity Bank, they have female CEOs at the hems of a feather. So how do you really see that coming to play in all of this? Management for me is like, we'll say that the players are an instrument for any company. So it is management. We talk about effective management and that are looking at the business to get a lot of issues. But putting women at the head of a feather and for me, you know that women are more the kind of meticulous kind of managing a feather. I believe that in Nigeria, banking, no matter how hard it is, we are seeing a new face that the female are taking over, which is good. Also, the one that I have been there before now, the recent one was from Zennet Bank, we have seen the performance of the lady in the Fidelity of Tongue, we have seen the one at Tambik IBC, you know, looking at their numbers, but we see more of them. That means also, investors are going to work, people that are so known, they are going to put in women, they are seeing more. And I believe that also, because that's what they have strategy, not just because they are women, they understand the environment where they are putting, and that's why they are making impact. For me, it's a new kind of development for the bank that we are seeing women heading their feathers for the past, and I believe that that will do more for the banking sector that they still understand the business. Women are meant to be for business, apart from men are the one leading both. As women, they understand business perfectly. Not they are leading the bank, that's what it was for all the banks. All right, thank you so much, I'm Ambrose Amodion for your time, and of course all the wonderful insight that you have given concerning the new peg by the central bank for the commercial banks, and of course what banks are doing in terms of capitalization and building investors' interest. Thank you so much for your time, we do appreciate it. That's what I believe. All right, that's the size of the show for today. I am Justin Apadouni. Many thanks for being there.