Chief Financial Officer of Access Bank Plc, Mr Seyi Kumapayi, has been quoted as saying that the financial institution is making efforts to reduce its funding costs.
In order to achieve this goal, the lender is exploring other sources of funding, which may not be a Eurobond, to keep its capital adequacy ratio at about 20 percent, more than regulators require.
According to what Bloomberg reported, Mr Kumapayi said Access Bank may consider retaining some of its profit as capital rather than distributing the cash as dividends to shareholders in order to build buffers after settling its $400 million subordinated Eurobond due in 2021.
Already, the financial institution is pondering on redeeming these bonds next year as prices on the notes rallied the most since August 10, pushing yields lower.
“The bank will repay investors next year as the bond, issued in June 2014, no longer qualifies as capital five years after being sold,” Bloomberg claimed Mr Kumapayi said by phone from Lagos.
Nigeria’s banking regulator allows lenders to count certain classes of debt and equity among the buffers they need to set aside to survive market turmoil.
Other big Nigerian lenders including Zenith Bank Plc, United Bank for Africa Plc and Fidelity Bank Plc raised dollar funds in the past two years to bolster their capital buffers after a 2016 contraction triggered a surge in non-performing loans.
Access Bank recently received a $50 million repayment on a loan to 9mobile, the company previously known as Etisalat Nigeria until it was taken over by creditors in 2017 after defaulting on loans. Nigeria’s fourth-biggest mobile carrier is repaying debt after being bought by Teleology Holdings Ltd. The repayment reduced the bank’s exposure to the firm to about N45 billion, Mr Kumapayi said.
