Nigerian banking stocks are on course for their biggest monthly slide in ten years as investors fearing dilution from a recapitalisation exercise dump their holdings.

The banking index, which tracks the stocks of the lenders listed on the Nigerian Exchange Group, was down 25.75 percent as at April 27, according to data from the NGX.

That’s a dramatic fall from a return of 21.21 percent in the month of March when banking stocks were not only the best performers on the exchange but also outperformed the All Share Index return of 4.58 percent.

The wind has since been knocked off their sails since the CBN announced new capital rules for the banks on March 28.

The banking index has plunged 35 percent to 760.55 points on April 25 from 1029.6 points on March 28.

“The market thinks that rights issues are in the offing and that equity dilution is on the cards,” Guy Czartoryski, head of research at Coronation Merchant Bank, said.

“True enough, but has the correction gone far enough? In aggregate, we think it has,” Czartoryski said.

Nigerian banks have 24 months to raise an additional c.N4 trillion to meet the CBN’s new capital rules.

Some of the biggest lenders from Access Bank to Guaranty Trust Bank have already announced plans to raise capital through Rights Issues, a decision investors fear will lead to a dilution of their existing shareholdings.

Access, Zenith, Guaranty Trust, First Bank of Nigeria holdings and United Bank for Africa (UBA) have all indicated capital raising plans.

FBN Holdings in a notice of its Extraordinary General Meeting filed with the Nigerian Exchange Limited disclosed that it would be seeking shareholders’ approval to raise N300 billion in additional capital.

According to the notice, shareholders will consider and vote on the special business “that the company be and is hereby authorised to undertake a capital raise of up to N300 billion.”

The financial institution is seeking to raise the funds via a public offering, private placement, or rights issue in the Nigerian or international capital markets.

Similarly, GTCO revealed that it would be seeking shareholders’ approval to raise $750 million.

In a notice on the capital raising, GTCO said the fund would be raised “through the issuance of securities comprising ordinary shares, preference shares, convertible and/or non-convertible notes, bonds or any other instruments, in the Nigerian and/or international capital markets.”

Access Holdings is also seeking to launch a capital raising programme to raise funds in naira and US dollars.

In a statutory notice filed with the NGX, Access Holdings said that it was looking at raising $1.5 billion via a share sale or bond offering.

The parent company of Access Bank, said it would also ask existing shareholders for permission to raise N365 billion through a rights issue at its next Annual General Meeting scheduled to be held this month.

The United Bank for Africa is also in the market to raise fresh capital to meet the new regulatory benchmark.

The Board of UBA Plc will seek shareholders’ approval to issue 10.8 billion new ordinary shares during the bank’s annual general meeting, as the group tries to raise its share capital from N17.1 billion to N22.5 billion.

Zenith Bank has also announced plans to raise an undisclosed amount in the international and Nigerian capital markets.

According to the company, the funds shall be raised through the issuance of ordinary shares, or preference shares, whether by way of private placement, rights issue or both.