By Adebisi Adeyemi, Lagos
Wema Bank Plc at an Extra-Ordinary General Meeting (EGM),is seeking the consent of its shareholders in a comprehensive scheme of capital reduction.
The bank is pursuing this holistic approach to enable it position its balance sheet for better efficiency.
Having been transformed to one of the leading banks within the retail banking space, Wema Bank, with its national authorization, has reemerged a stronger, more efficient, resilient and customer-focused organisation with a robust risk and governance structure.
However, a review of the bank’s financials reveals the carrying of a negative retained earnings balance, which arose from losses prior to June 2009 when the current management assumed office. Though the bank has since returned to profitability in the last four years, the implication of negative retained earnings is that, the bank, by regulation, is precluded from providing necessary returns to providers of capital.
“The holistic capital reduction scheme pursuant to the procedures set out in sections 105, 106, 107, 108, 109, 110, 111 and 120 of CAMA and Rules 4(d), 4(g) and 5(4) of the Company Proceedings Rules 1992 would have no impact on the current holdings of shareholders, though the bank will be creating a capital reduction account while an equivalent amount will be moved from its share premium account to effectively close the entries,” it further stated.
“Following the consent of the shareholders, the bank will subsequently make an application to the Federal High Court for the approval of the scheme,” it said.
