BOA Togo: Planned Capital Increase Raises Concerns

Banking

Tuesday, 20 August 2024 16:42

BOA Togo: Planned Capital Increase Raises Concerns

(Togo First) - The Bank of Africa (BOA) is set to increase its capital for its subsidiaries listed on the BRVM stock exchange, including BOA Togo. This decision aligns with new regulations from the Central Bank of West African States (BCEAO), which require banks in the WAEMU region to maintain a minimum capital of 20 billion CFA francs, accompanied by a three-year moratorium.

In an official statement, BOA announced that it would raise capital by issuing new bonus shares. This will allow existing shareholders to receive additional shares proportional to their current holdings without needing to invest more capital. The new shares will be created by converting part of the subsidiaries' accumulated reserves into capital.

These new shares will carry dividend rights starting January 1, 2024, meaning that new shareholders will be entitled to dividends and other rights from that date.

However, BOA Togo's strategy of increasing capital through reserves raises concerns. The Togolese subsidiary has accumulated losses resulting in negative retained earnings of over 1.5 billion CFA francs in 2022 and has virtually no reserves.

The bank has not yet disclosed its net income for 2023, but it would need a non-distributable profit of over 4.5 billion CFA francs to proceed with the capital increase.

Despite these challenges, BOA Togo has demonstrated strong growth. From 2015 to 2023, its Net Banking Income (NBI) rose significantly from 2.7 billion CFA francs in its first year to 12.8 billion in the last year. Under the leadership of Youssef Ibrahimi, who took over in 2021, the bank's profits reached 2.42 billion CFA francs in 2022. In 2023, the group’s total balance sheet stood at 217.5 billion CFA francs, up from 196 billion CFA francs in 2022.

This capital increase is not just a regulatory response; it reflects BOA Togo's ambition to strengthen its position in the Togolese banking sector. The bank has recently launched significant financing programs for small and medium-sized enterprises (SMEs) with a budget of several hundred billion CFA francs.

The transaction marks the beginning of a capital increase season for other Togolese financial institutions, more than half of which must comply with the new BCEAO standards.

BOA West Africa holds a 94.46% stake in BOA Togo. The remaining shares are held by private investors, including Burkinabe businessman and Chairman of the Board, Lassiné Diawara (5%), Abdoulaye Seydi (0.47%), and Paul Derreumaux (0.04%), who served as Chairman from the bank's founding until 2011. Other small shareholders include former CEO Paulin Laurent Cossi.

In 2017, BOA Togo's capital increased from 10 billion CFA francs to 15.5 billion CFA francs.

Fiacre E. Kakpo

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