News Column

Diamond Bank's Shareholders Pledge to Cash Back Rights Issue

August 6, 2014

Chijioke Nelson

DIAMOND Bank Plc's shareholders have pledged to cash back their equity rights and ensure that the bank pursues and realises its strategic growth objectives.

The bank's drive to beef up its capital by N50.37 billion through rights issue received the overwhelming acceptance at it shareholders forum in Lagos, yesterday.

The lender is currently issuing 8,685,145,863 ordinary shares of 50 kobo each, which will be sold to existing shareholders whose names appeared on the registrar of members and transfer books of the bank as at the close of trading on Friday, June 13, 2014.

The stocks were billed to be allocated on the basis of three ordinary shares for every five held.

The shares, which are payable in full on acceptance and tradeable on the floor of the Exchange throughout the period of the issue, while acceptance list, opened since July 30, 2014, will close on August 26, 2014.

Speaking to the shareholders, the bank's Group Managing Director/CEO, Dr. Alex Otti, informed the shareholders that large chunk of the proceeds from the issue would be deployed into branch network expansion and renovation, information technology upgrade and up-scaling of the retail segment of its operations.

The bank intends to expand its branch network to 350 from the current 257. Following this projection, more than eighty percentage of the money raised will be injected into it.

Besides, the funds will be channeled toward strengthening its competitive capacity in the middle market by developing and sharpening its strategic focus, especially in the area of MSMEs, sole proprietorship and the corporate business sector.

"The retail end of the market is very important to us, therefore we will be investing 86 per cent, which is about N42 billion in that area while development of IT infrastructure will consume about four per cent and the remainder will be a part of the working capital. We do understand that to remain competitive we must think and work ahead," he said.

Some shareholders said the move by the bank to raise the fresh capital was commendable, especially as the management has maintained stable growth and profitability in the last three years.

Murhi Ojo, a shareholder, said: "The management of the bank has performed very well. We have the confidence that the money that will be realized will be prudently used and make more profit for the shareholders. It is a welcome idea and to me, the timing is right."

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Source: AllAfrica

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