Wema Bank Plc says it will be reorganising its share capital at its forthcoming Extraordinary General Meeting, where it will be seeking the consent of shareholders in the comprehensive scheme of capital reduction.
This move, it noted, was pursuant to the procedures set out in Sections 105, 106, 107, 108, 109, 110, 111 and 120 of the Companies and Allied Matters Act and Rules 4(d), 4(g) and 5(4) of the Company Proceedings Rules of 1992.
The bank, in a statement on Thursday, said it was pursuing the approach to enable it to position its balance sheet for better efficiency.
Having been transformed to one of the leading banks within the retail banking space, Wema Bank said with its national authorisation, it has reemerged a stronger, more efficient, resilient and customer-focused organisation with a robust risk and governance structure.
It, however, said, “A review of Wema Bank’s financials reveals 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 ploughing 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.”
The holistic capital reduction scheme, it explained, 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, Wema Bank said it would subsequently make an application to the Federal High Court for the approval of the scheme.
The statement added, “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 digitisation.”
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