Tier-2 Banks’ Market Value Falls below N2 Trillion
As banks leaders continue to designing plans on how to meet new capital deadline in less than two years, the stock market value of Tier-2 bank slide below N2 trillion on Friday, according to data obtained from the Nigerian Exchange.
Analysts said quoted company face risk of over or under pricing of asset in the course of capital raising exercise.
MarketForces Africa gathered that pricing can make of mar listed banks capital raising efforts, as analysts said that share price at the time of taking final decision is fundamental for investing public.
“The low the share price, the more numbers of shares a lender must issue to meet the new capital – whether rights issue or public offer”, a banking expert said in a chat with MarketForces Africa Research team.
Unfortunately, like their Tier-1 peers, all the mid and smaller lenders are trading at steep discount to their respective 52- week highs, their respective stock market data showed.
MarketForces Africa however discovered that these local lenders differ in terms of national and international authorisation which determine that amount of capital requires to augment their current positions.
“Some are safe, some runs the risk of not launching capital raise in time amidst fund raising competition. Possible license(s) downgrade (s) is not impossible in the current equation”, experts told MarketForces Africa.
Banks owners and managers appear not to be interested in merger and acquisition, based on findings. Big lenders also appear not to be keen in acquiring local lender, according to some insiders.
Meanwhile, deposit money banks capital raising exercises has been projected to heat up capital market strongly in 2025 – penultimate to the Central Bank of Nigeria (CBN) deadline.
The apex bank new capital surfaced when the market correction began. Most banking stocks had hit overbought, and then their respective peak valuation reversed.
FCMB Group Plc market capitalisation was N155.451 billion on Friday, gained 10 kobo from previous week close to N7.85. The tier-2 lender is trading at 37.35% below its 52 week high. The group share price had peaked at N12.45 in 2024, marking its 52 week high, before it reversed uptrend.
In less than two years, FCMB is expected to raise additional funding totaling N374.7 billion, according to FSDH Research to meet N500 billion capital for bank with international authorisation.
Fidelity Bank Plc is worth N316.92 billion in the stock market, traded at N9.90 per share on the floor of the Nigerian Exchange amidst N127 billion capital raise. The tier-2 lender traded at 31.25% discount to its 52 week high.
Fidelity share price had climbed to N14.4 this year on the Nigerian Exchange before banking stocks became investors profit taking target in the second quarter of 2024.
The bank is in the market to raise N127.1 billion via right issue and public offers as part of efforts to meet its new capital.
According to FSDH Research, Fidelity Bank would need N370.1 billion to meet new capital requires for lenders with international authorisation.
On the Nigerian Exchange, Ecobank Transnational Incorporation has a market value totaling N391.762 billion at the close of trading session on Friday. The pan African lender market price has been steadied at N21.35 in the last five trading session on the Nigerian exchange,
The group’s Nigeria subsidiary is the least affected by the Central Bank of Nigeria (CBN) banking sector recapitalisation programme. The group only need to recapitalized Ecobank Nigeria with N7 billion to meet new capital deadline for national lenders.
The market placed N673. 763 billion on Stanbic IBTC Holdings Plc on Friday after the Tier-2 lender traded flattish for three days in the week. Its market price settled at N52, thus trading at 37.39% below its 52 week high.
According to data from the Nigerian Exchange, Stanbic IBTC had peaked at N83.05, its 52 week high before it became target for profit takers in the stock market. According to FSDH Research, Stanbic IBTC would need to raise N90.7 billion to meet its new capital base for national authorisation.
Sterling Financial Holdings Company Plc was valued at N124.086 billion on the Nigerian Exchange at the end of trading session on Friday. Its share price fluctuated each day during the last three days session before it closed at N4.31.
At this level, Sterling Financial Holdings Company is trading at 47.44% to its 52 week high. The financial holdings had peaked at N8.20 before it went south following selling spree in the second quarter of the year.
To retain its national banking license, Sterling Financial Holdings Company Plc must raise N142.8 billion in less than two years to refuel Sterling bank, according to FSDH Research note.
Market value of Wema Bank Plc was N95.15 billion on Friday, according to data from the Nigerian bourse. The bank experienced positive price movement that lifted its share price to N7.40 from N7.10 in the prior week.
The tier 2 lender is trading at about 41% discount of its peak price in the last one year. According to data from the Nigerian Exchange, Wema Bank share price hit 52 week high of N12.5 per share in the last market wide rally before correction.
Wema Bank has N40 billion right issues to shareholders and the management is in the process to raise more funds to meet N200 billion new capital base in less than two years. #Tier-2 Banks’ Market Value Falls below N2 Trillion
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