First City Monument Bank (FCMB) Limited has successfully secured over $300 million medium and long-term funding which will be used to finance small and medium scale enterprises (SMEs) and other activities that will enhance financial inclusion in Nigeria.
The loan was secured from Development Finance Institutions (DFIs) and international commercial banks, according to a statement from the bank on Sunday.
“The $300 million secured by FCMB from the DFIs demonstrates the confidence the lenders and the international financial market have in the management capabilities of the bank, the bank stated.
“Proceeds of the facility will be used for general lending purpose to key sectors of the Nigerian economy, branch development as well as channel enhancement.”
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According to Ladi Balogun, the group managing director and chief executive officer of the bank, the successful fundraising exercise and the number of international institutions that participated in the provision of the facilities is a demonstration of the level of confidence which investors and the international financial market have in FCMB and the Nigerian financial market as a whole.
Balogun added that a large part of the facility would be used to support critical areas of the Nigerian economy, in line with the bank’s commitment to always provide veritable source of funding for the businesses of our customers while also adding value to its shareholders’’.
“We are excited about this development, as it shows that the financial institutions truly believe in the growth potential of FCMB, the excellent corporate governance structures and culture we have put in place,” he added.
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Earlier in the year, FCMB considered raising $300 million from the Eurobond markets, but the plan was suspended due to unfavourable market terms.
It is pertinent to note that the average interest rate on the DFI facilities is about 4 per cent below the Eurobond’s rate, as the the bank’s rating was recently upgraded to A- by Global Credit Ratings (GCR), a reputable rating agency.
According to the agency, the upgrade is as a result of the bank’s “improvement in profitability and reduction in loan and deposit concentrations of FCMB, while maintaining adequate capitalisation”.
The International Finance Corporation (IFC), a member of the World Bank Group and the largest global development institution; Citibank and Overseas Private Investment Corporation (OPIC), a multilateral finance institution owned by the US government, provided the loan.
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Other Development Finance Institutions (DFIs) include Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. (FMO) – the Dutch Development Bank; Société De Promotion Et De Participation Pour La Coopération Economique S.A (PROPARCO), a subsidiary of the Agence Française de Développement (AFD), and the European Investment Bank (EIB), a multilateral finance institution owned by the European Union.
FCMB also said it “secured $100 million senior debt financing from the IFC for a tenor of five years, another $100 million from OPIC and Citibank for between tow to five years tenor; $60 million from FMO and PROPARCO for tenor between three to five years and $32.7 million from the EIB for tenor of eight years. The facility from Citibank/OPIC, IFC, FMO/PROPARCO will provide lending to telecommunications, power and infrastructure projects.
In addition, FCMB said it would utilise a portion of the loan from Citibank/OPIC to finance Small and Medium Scale enterprises (SMEs) and other activities that will enhance financial inclusion in Nigeria.
“The $32.7 million provided by EIB will be dedicated to channel expansion purposes,” it said.
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