FBN Holdings injects $66 mln from insurance unit sale into First Bank

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ABUJA – Nigeria’s FBN Holdings Plc said on Monday it has sold its life insurance company and invested the proceeds of 25 billion naira ($66 million) as equity into its lending business to boost the bank’s capital ratio.

Nigeria’s banks are expected to take a big hit to revenues and face rising borrowing costs this year as central bank measures to support the naira currency squeeze lenders already hit by fallout from the coronavirus and the oil price shock, analysts say.

FBN Holdings Chief Executive Officer Urum Kalu Eke said the group wanted to focus on improving shareholder value with the divestment from its life insurance firm, FBN Insurance, and boost the capital position of its commercial banking unit, First Bank to 16.53% as of June. The regulatory minimum is 15% for local lenders with international licences.

FBN Holdings said on Wednesday pretax profit fell 31.1% in the first-half to 12.73 billion naira.

In 2010, the central bank directed lenders to either sell their stakes in subsidiaries involved in activities including insurance, asset management and investment banking – or adopt a holding company structure, where those activities are separate from the holding of retail deposits.

($1 = 381.00 naira)

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