The Nation Newspaper Banks, experts okay CBN’s policy on recapitalisation
CBNHowever, they caution that the implementation should not be done in a disruptive manner so as not to rupture the economy.
Others included: merchant banks, N50 billion; non-interest banks with national licenses, N20 billion and non-interest banks with regional licenses, N10 billion minimum capital.According to the banks, the import of the recapitalisation is that Nigerian banks are safe and reliable. Experts, who spoke yesterday included: Managing Director, Arthur Steven Asset Management, Mr Olatunde Amolegbe; Managing Director, AIICO Capital, Mr Femi Ademola; Chief Executive Officer, Centre for the Promotion of Private Enterprise , Dr Muda Yusuf; President, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture , Mr. Dele Oye; President, Association of Capital Market Academics in Nigeria, Prof. Uche Uwaleke; Managing Director, HighCap Securities, Mr.
NACCIMA said it would engage relevant stakeholders over the recapitalisation policy as it represents a significant policy shift within the banking sector with potential implications on the broader macroeconomic landscape. “As it stands, banks are on the same page and as such, there is no need whatsoever for any fear, as the banks have the capacity to meet the recapitalisation in line with allowable options stipulated by the apex bank.
“With their background of good returns and liquidity, banking stocks are toasts of domestic and foreign investors. “We now have a situation where virtually all the banks have about 50 per cent of requirements and they will all on aggregate need a cumulative of more than N2 trillion of fresh capital to remain in business. We expect significant capital market activities in the next 24 months,” the former president of the Chartered Institute of Stockbrokers said.
“So, the shareholders are not able to get the incomes as dividends and won’t also be able to recapitalise as share capital. “I will suggest that the apex bank conducts a stress test for the banks and estimate what should be provided for from both existing liabilities and contingent liabilities. “The real issue is that inflation had weakened the value of money over time which makes recapitalisation imperative and inevitable.
“Given the young age of non-interest banks in Nigeria, they should be allowed a longer period, say, three years to meet the minimum capital requirements,” Uwaleke said. Adonri said the apex bank has justification for the new minimum capital base given the erosion of the value of the naira, which may expose Nigerian banks to risks through their foreign operations.
“It is worrisome that this policy has come at a time when banks are in the surplus end of the economy from where capital ought to flow to production which occupies the deficit end,” Adonri said.Omojuwa said the new policy will eventually put some Nigerian banks among the top in Africa, a position not presently enjoyed by any of the country’s banks, notwithstanding that Nigeria is the largest economy on the continent.
“This has always limited banks especially in Nigeria to fund big capital projects without support from foreign banks. There is no better time to have this policy than now,” Omojuwa said.Yusuf said the proposed recapitalisation of banks should be done in a manner that would minimise shocks and disruptions to the banking system and the economy at large.
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