Femi Otedola, billionaire businessman, has supported the 70 per cent windfall tax proposed by the Federal Government on foreign exchange gains of banks.

In a statement he issued on Wednesday, Otedola, who is the chairman of FBN Holdings, slammed the banking sector for its $50m estimated bill on maintaining private jets and an even higher bill on the purchase of private jets.

In July, the Senate amended the Finance Act to impose a 70 per cent windfall tax on banks’ foreign exchange profits.

A windfall tax is a higher tax levied by the government on sectors or businesses that have disproportionately benefited from favourable market conditions.

President Bola Tinubu said the money would be part of the revenue used to fund the N6.2tn supplementary budget.

Otedola argued, “I write to express my strong support for the implementation of a windfall tax in Nigeria and to highlight the critical role this measure plays in fostering a fairer and more equitable economic environment.

“This endorsement aligns with the ongoing efforts to reform the Nigerian banking sector, aimed at enhancing economic stability and integrity within our financial institutions. Windfall taxes are levies on companies or individuals who receive substantial, unexpected profits due to circumstances beyond their usual control or investment. Taxing these extraordinary gains ensures a fairer distribution of wealth, allowing those who benefit disproportionately to contribute more significantly to the broader societal good.”

He said that the revenue generated from windfall taxes could be channelled into essential public services, such as healthcare, education, and infrastructure, benefiting all citizens and helping to reduce social inequalities.

“The recent announcement of a windfall tax on the extraordinary profits earned by Nigerian banks is a significant first step towards achieving these goals.

The consolidation of various foreign exchange rate systems into a single investors and exporters (I&E) window led to the depreciation of the Naira and substantial increases in the value of bank assets denominated in United States Dollars.

“This extraordinary gain should be redistributed to fund critical infrastructure development, education, healthcare access, and public welfare initiatives, addressing the intense pressure on public finances and alleviating the cost-of-living crisis many Nigerians face,” he said.

Otedola, who is also the chairman of Geregu Power, pointed out that while the financial statements of manufacturing, telecoms, and SMEs indicated that many of them may not be able to pay corporate tax for at least the next two years, due to their negative equity, therefore, becoming essential for the government to step in and provide support to those entities.

On the appetite of the banking sector for private jets, Otedola said, “Amid the progress with banking sector reforms, there is an urgent need to address entrenched issues within the Nigerian banking sector.  A concerning trend has emerged where some bank chief executives prioritise personal gain over their duty to shareholders and customers. The core values of banking—trust, integrity, and service—must be upheld. I am particularly critical of the culture of flamboyance, especially the ownership and operation of private jets.

“Nigerian banks are spending an estimated $50m annually just on maintaining private jets, with over $500m gone into purchasing nine private jets by four banks. This level of extravagance significantly erodes public trust in our financial institutions and diverts crucial resources away from vital areas such as operational efficiency, technological innovation, and customer service.”

He called on the banks to regain the trust of their customers by realigning their financial priorities and invest in areas that directly improve customer services and enhance technological infrastructure.

The billionaire also commended the recent recapitalisation initiative in the banking sector, saying, “This move is designed to strengthen the banking sector’s capacity to support Nigeria’s broader economic development goals. It is crucial for banks to focus on operational efficiency, technological innovation, and customer service, rather than executive extravagance.”

Zenith Bank Plc is planning to raise N290 billion through a Rights Issue and a Public Offer to meet the Central Bank of Nigeria’s revised minimum capital requirements for Nigerian commercial banks.

The announcement was made during the Zenith Bank Rights Issue/Public Offer Signing Ceremony at The Civic Centre, Victoria Island, Lagos.

This signifies a crucial step in the bank’s previously announced capital-raising program, designed to strengthen its capital base and support its growth trajectory across its banking and non-banking subsidiaries.

The Rights Issue offers 5,232,748,964 ordinary shares of 50 Kobo each at N36.00 per share, while the Offer for Subscription presents 2,767,251,036 ordinary shares of 50 Kobo each at N36.50 per share.

The Rights Issue allows existing shareholders to purchase additional shares in proportion to their current holdings and is being offered based on one new ordinary share for every six existing ordinary shares held as of Wednesday, July 24, 2024.

Conversely, the public offer for subscription is open to the general public and aims to attract new investors.

Speaking at the signing ceremony, the Group Managing Director/CEO of Zenith Bank Plc, Dame (Dr.) Adaora Umeoji, OON, expressed enthusiasm about the Rights Issue and Public Offer, stating, “Today, we signed the transaction documents concerning Zenith Bank’s N290 billion Rights Issue and Public Offer.

‘’This is slightly above the N230 billion required for us to meet the CBN’s minimum recapitalisation requirement. We are extremely pleased with the level of enthusiasm we have already seen from our existing shareholders for the Rights Issue.

‘’Beyond existing shareholders, incorporating a public offer is crucial to ensure that our customers, who are not yet shareholders, can have the opportunity to join in the ownership of this premium brand.

“In terms of Tier-1 Capital, Zenith Bank has been adjudged by The Banker, Financial Times to be number one in Nigeria and the only Nigerian Bank in the top 600 banks globally. Over the years, we have consistently rewarded our esteemed shareholders.

‘’Specifically, in the last five years, we have maintained the record as the highest dividend-paying Bank in Nigeria. In 2023, we set a record as the only Nigerian Bank to pay a dividend of N4 per share.”

She added that the proceeds from the capital raise will be channelled towards expanding banking operations across Africa and internationally, investing in technology infrastructure, and supporting working capital on an ongoing basis.

She expressed optimism that given Zenith Bank’s track record of profitability and consistency in creating wealth for shareholders, the capital raise will be a resounding success. She assured prospective investors that Zenith Bank will maintain its leadership in dividend payout in the years ahead and encouraged them to invest in value and invest in Zenith Bank.

She also expressed her profound gratitude to the Founder and Chairman, Dr. Jim Ovia CFR, whose vision over 34 years ago laid the foundation for a reputable, dominant, globally recognised financial institution known for innovation, superior performance, and the creation of premium value for all stakeholders.

The Chief Executive of Stanbic IBTC Capital Limited, Mr. Oladele Sotubo, commended the management of Zenith Bank for their commitment to the transaction, which provides an opportunity for existing shareholders to consolidate their position and welcomes new investors to join the journey towards the future of Zenith Bank.

He also expressed gratitude for the opportunity for Stanbic IBTC Capital Limited to lead and guide the execution of the transactions.

He said, “A combined offer that is both a Rights Issue and a Public Offer confirms Zenith Bank’s position as a pacesetter and a role model, which will undoubtedly spur more transactions in the capital market.”

The lead issuing house for the Rights Issue and Public Offer is Stanbic IBTC Capital Limited, with joint issuing houses including Quantum Zenith Capital & Investments Limited, CardinalStone Partners Limited, Meristem Capital Limited, Chapel Hill Denham Advisory Limited, Coronation Merchant Bank Limited and Vetiva Advisory Services Limited.

The Offer will open on Thursday, August 1, 2024, and close on Monday, September 9, 2024.

Zenith Bank has provided a robust suite of platforms for the Rights Issue and Public Offer. Applications can be made through any of Zenith Bank’s electronic channels: Zenith Bank Internet Banking, Zenith Bank Mobile Application, Zenith Bank Corporate Internet Banking, Zenith Bank Branches nationwide, and the NGX Invest platform.

The Zenith Bank E-Application channels have been integrated into the NGX Invest platform, which can be accessed at https://invest.ngxgroup.com, and are available to all applicants and authorised receiving agents to submit applications on behalf of applicants. The electronic channels democratises the distribution of public offers and rights issues in the capital market, enabling investors to subscribe with the click of a button.

Summit Bank, a new Islamic bank has just received provisional licensing from the Central Bank of Nigeria (CBN), to operate non-interest banking, devoid of interest rates.

Summit Bank brings to six the total number of full-fledged Islamic banks in the country.

The full-fledged Islamic banks, duly licensed by the CBN are: Jaiz Bank Plc; Taj Bank Limited; Lotus Bank Limited; Sun Trust Bank Limited; Alternative Bank Plc and Summit Bank Limited.

Non-interest banking system is governed by a resilient code of ethics in all its practices and functions, and there are no interests.

It is the first, where a customer, whether an individual or business, is not just a customer but is a partner with the Bank or owner of goods and assets.

This means they share the risks as well as the profits of such a partnership and ownership. This unique arrangement is done under the principles of Shariah (Islamic Law) which always ensures complete transparency

Non-Interest Banking, emerged as a response to both religious and economic exigencies.

It is an alternative financial system, operating within a framework that adheres to the tenet-based principles of Shariah (Islamic Law), thereby introducing a fair system of social justice and equality, while fulfilling the financial needs of people and maintaining high standards of ethics, transparency and a sense of responsibility.