Zenith Bank shelves plans to raise N100bn due to weak economy

Nigeria’s Zenith Bank has shelved plans to raise N100 billion ($318 million) via a combination of bonds and share sales due to weak capital markets, it said on Thursday.

The bank had expected market conditions to improve when it announced plans to seek approval for the funds last month, said Zenith’s head of investor relations Michael Anyimah, but the lender cancelled them due to the struggling economy, the Reuters News Agency reports.

Africa’s biggest economy is in its first recession in 25 years, brought on by low oil prices which have slashed government revenues and crippled dollar supplies in the country, making life difficult for businesses.

“The request for shareholders’ approval to raise fresh capital has been withdrawn,” Anyimah said, adding that the bank had strong buffers to support its operation.

Shares in Zenith, which has shed 6.4 percent this year on the Lagos bourse, climbed 0.07 percent to N13.82 each by 1200 GMT. They gained 5 percent last year.

Nigerian regulators have been trying to revive their IPO market which dried up almost 10 years ago following a crisis in the West African country. The Securities and Exchange Commission has proposed to cut listing fees to attract issuers.

However, the main stock index is down 5.1 percent this year after it shed 6.2 percent in 2016. In dollar terms, stocks lost 40 percent last year as the naira fell by a third in the official market against the dollar due to central bank currency reforms.

Zenith has posted a pretax profit of N156.75 billion for 2016, up from N125.62 billion a year earlier.