Wema Bank Plc has issued a notice of an Extra-Ordinary General Meeting (EGM), to seek the consent of its shareholders for a comprehensive scheme of capital reduction.
The exercise is in line with the procedures set out in Sections 105, 106, 107, 108, 109, 110, 111 and 120 of Companies and Allied Matters Act (CAMA) and Rules 4(d), 4(g) and 5(4) of the Company Proceedings Rules 1992.
Wema Bank is pursuing this holistic approach to enable it position its balance sheet for better efficiency. Having been transformed to one of the leading banks within the retail banking space, Wema Bank with its national authorisation, has reemerged stronger, more efficient, resilient and customer-focused organisation with a robust risk and governance structure.
A review of the bank’s financials revealed the carrying of a negative retained earnings balance, which arose from losses prior to June 2009 when the current management assumed office.
Though the bank has since returned to profitability in the last four years, the implication of negative retained earnings is that, the bank, by regulation, is precluded from providing necessary returns to providers of capital.
“We believe the completion of this exercise would result in the plough back of subsequent years’ profits – aiding the continued growth of the institution, improvements in performance, particularly as it relates to the reduction in our cost to income and return on equity ratios while commencing the payment of dividend,” a statement from the bank said.
The holistic capital reduction scheme would have no impact on the current holdings of shareholders, though the Bank will be creating a capital reduction account while an equivalent amount will be moved from its share premium account to effectively close the entries. Following the consent of the shareholders, the bank will subsequently make an application to the Federal High Court for the approval of the scheme.
Wema Bank continues to improve on its performance, despite the relatively challenging business environment. Furthermore, the bank has recorded successes in several financial and non-financial priorities specifically, Wema Bank’s growth strategy – Project LEAP – revolves around a blended approach involving partnership, growing branch network and digitization.
This was further strengthened by the May 2017 launch of ALAT – Nigeria’s first fully digital Bank. ALAT is the first of its kind with its end-to-end digital offering and customer interaction
The bank has its National Long-Term Rating affirmed at (BBB-) by Fitch and Global Credit Rating (GCR), both leading credit rating and research agencies with its Non-Performing Loans (NPLs), Capital Adequacy Ratio and Liquidity Ratio all within the regulatory threshold.