FCMB To Convert N23bn Loan To Equity To Exit CBN’s Forbearance Regime.
First City Monument Bank (FCMB) has unveiled plans to convert N23 billion in loans to equity by 30 June 2025, as part of its strategy to exit the Central Bank of Nigeria’s (CBN) forbearance regime. The bank’s Managing Director, Yemisi Edun, announced on 17 June in Lagos that the conversion would involve restructuring non-performing loans into share capital, boosting the bank’s equity base to meet CBN’s new capital requirements. The move aims to strengthen FCMB’s financial position and enhance its ability to support Nigeria’s economic recovery, particularly in the agricultural and SME sectors.
The CBN’s forbearance regime, introduced to mitigate the impact of economic downturns, allowed banks to defer loan repayments, but stricter regulations now demand higher capital buffers. FCMB’s loan-to-equity conversion targets debts from distressed borrowers, particularly in the oil and gas sector, which have been hit by global price volatility. Edun stated that the strategy would reduce the bank’s non-performing loan ratio from 5.2% to below 3%, aligning with international banking standards. The bank has also secured shareholder approval for a N150 billion capital raise to complement the conversion.
The announcement has elicited mixed reactions. Financial analysts commend FCMB’s innovative approach, noting that equity conversion could preserve customer relationships while strengthening the bank’s balance sheet. However, concerns remain about the valuation of converted loans and potential dilution of existing shareholders’ stakes. The Nigerian Stock Exchange saw a 3% uptick in FCMB’s shares, reflecting cautious optimism. The bank’s strategy mirrors broader efforts to stabilise Nigeria’s economy, which faces challenges like the Benue crisis and high inflation.
FCMB’s exit from the forbearance regime positions it as a leader in Nigeria’s banking sector transformation, but execution will be critical. The bank plans to leverage digital banking to drive growth post-exit, targeting underserved markets in northern Nigeria. As the deadline approaches, stakeholders will monitor FCMB’s ability to balance profitability with risk management, setting a benchmark for other banks navigating the CBN’s regulatory overhaul.