NBS Bank plans to issue bonus shares that raise its reserves to K1.5 billion and more than comply with the Reserve Bank of Malawi (RBM) new capital requirement of K850 million. A bonus share is a free share of stock given to existing shareholders in a company, based on the number of shares that the shareholder already owns. |
Early last year, the RBM increased the minimum capital requirement for all commercial banks to K850 million ($6.08 million) from K210 million ($1.5 million), share premium inclusive. The central bank's move aimed to maintain a robust financial sector in the wake of the global financial crisis in 2008 that shattered confidence in the global financial system. The banks were given up to June this year to meet the minimum capital requirement.
In a statement, jointly signed by NBS Bank chairperson Felix Mlusu and company secretary Martin Ndenya, the bank said it will discuss the issue at its Extraordinary General Meeting (EGM) in Blantyre on December 30 2010. "The company proposes to issue 26 191 909 fully paid up ordinary shares to all shareholders by way of a bonus issue to meet the minimum capital requirement for banks. The directors, therefore, propose that the company moves K288 386 000 from distributable revenue reserves through issue of an appropriate number of new ordinary share of K0.50 each in order to raise the capital required,' said the statement.
This, according to the bank, would be accomplished by the issuing of one new ordinary share of K0.50 each at the current market price of K11 per share for every existing 18 ordinary shares held. The bank said it will make an application to the Malawi Stock Exchange (MSE) to amend the current listing particulars of the company and to list the shares resulting from bonus issues on January 4 2011.
FDH Stockbrokers Malawi Limited has asked shareholders to approve the bonus issue. "Benefits of the extra shares would reflect in the medium to long-tern when the price of the shares go up, assuming the underlying performance of the bank continues to be impressive to investors." said a statement from the brokers.