First Bank records N400bn over-subscription
By Babajide Komolafe
Posted to the Web: Friday, August 31, 2007



*Board okays merger with Ecobank

LAGOS — FIRST Bank Nigeria Plc may have recorded over N500 billion subscription from the N100 billion hybrid public offer floated in June. This means  over-subscription by 400 per cent.
Besides, contrary to speculations that the bank's proposed merger with Eco Transnational has been suspended, the boards of the two banks have approved the merger.

Hints of the over-subscription were dropped at the 38th Annual General Meeting in Abuja yesterday by the President, Advancement for the Rights of Shareholders, Dr. Umar Farouk, who said preliminary results from the collation of subscription to the offer revealed that over N500 billion subscriptions was recorded.
Farouk who is also a shareholder of the bank urged the bank to accept all the subscription as investors are not disposed to having their money returned.

Speaking in the same vein, President, Shareholders Solidarity Association of Nigeria, Chief Akintunde Asalu, observed that the bank needed a lot of money to expand its operations hence it should keep all the money raised from the offer otherwise it would have to return to the capital market in another two years to raise more funds.

Asalu observed that competition was getting stiffer in the banking industry especially in the area of branch network and to compete favourably, the bank needed to open more branches and this costs money. He advised the bank that besides accepting all the subscriptions to the offer, it should make branch expansion a priority in the utilisation of the proceeds.

Responding, Managing Director/Chief Executive of the bank, Mr. Moyo Ajekigbe, described the response to the offer as overwhelming and tremendous. He said while the board appreciated the advice that it should accept all the money subscribed to the offer, its decision would be guided by the tone of adequacy. He remarked that the offer prospective allowed the bank to take as much as N125 billion in the case of oversubscription but in view of the advice by shareholders, the board would review the suggestions and come out with a position.

Also responding to questions on the state of the proposed merger with Eco Transnational, Ajekigbe said the boards of the two banks had agreed to the merger and the next thing was to conduct due diligence which would influence the determination of the exchange ratios of the shares of the banks. He said the two banks hoped to conclude the merger before the end of the current operating year of the bank.

Meanwhile, the bank declared N5.2 billion dividends which translate to N1 per share as well as a bonus issue of one new share for every six existing shares.

The bank recorded gross earnings of N90.3 billion up 34 per cent from N67.4 billion in 2006. Profit before tax went up by 17.4 per cent to N25.6 billion from N21.8 billion while profit after tax rose by 17.2 per cent  to N20.4 billion from N17.4 billion. Also, total balance sheet size plus contingent grew by 48 per cent from N732 billion to N1.08 trillion while shareholders’ funds rose by 29.7 per cent to N83.4 billion from N64.3 billion.