NBS Bank to recapitalise - 27/04/2010

NBS Bank, one of the four commercial banks listed on the Malawi Stock Exchange (MSE), says it will increase its capital through a rights issue to meet the Reserve Bank of Malawi (RBM) minimum capital requirement for commercial banks. In a statement announcing the bank's annual general meeting, NBS Bank company secretary Martin Ndenya said the recapitalisation will be discussed for approval at the bank's sixth annual general meeting in Blantyre on May 13 2010. The rights issue—an arrangement where a company sells new shares to existing shareholders in proportion to their current shareholding—is expected to increase NBS Bank's share capital by 133.3 million being one share for every 3.7 ordinary shares held.

"As provided by article 47, the additional shares shall be issued to the existing shareholders and thereafter to any other shareholders as the directors in their discretion may think fit and at a price to be set relative to the quoted price as provided by the Malawi Stock Exchange listing rules," said the statement. Early last year, RBM hiked by over 300 percent the minimum capital requirement for commercial banks from K210 million (about $1.5 million) to K850 million ($6.08 million), share premium inclusive.

The central bank gave the financial institutions an 18-month period from February 2009 to comply with the new regulation or risk being closed down, in a move to maintain a robust financial sector in the wake of the global recession. Other listed banks, Standard Bank, National Bank of Malawi and FMB last year already raised their capital in line with the RBM directive by issuing of bonus shares— a free share of stocks given to existing shareholders in a company, based on the number of shares that the shareholder already owns.

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