Sidebar

Exclusive Reports

29
Fri, Mar

Experts Speak On Planned Recapitalization Of Banks

Featured
Typography
  • Smaller Small Medium Big Bigger
  • Default Helvetica Segoe Georgia Times

Experts in the financial sector have reacted to plans by the Central Bank of Nigeria (CBN) to recapitalize the banking sector.

 

The Governor of CBN, Godwin Emefiele while unveiling his plans for the banking sector shortly after his reappointment for a second term highlighted a broad range of issues that will dominate the focus of the CBN, most of which are a continuation and consolidation of policies from the last five years. He also mentioned the need to recapitalize the Deposit Money Banks (DMBs).

 

Reacting to the plan, Lagos Chamber of Commerce and Industry (LCCI) said the proposed recapitalization of Nigerian banks would further strengthen the capacity of banks to support the economy better.

 

The Director-General of LCCI, Muda Yusuf, said the idea of recapitalization of banks was not bad.

 

According to him the policy “would strengthen the capacity of banks to support the economy better, especially with regards to large projects. It will also be beneficial in bolstering the capacity of the banks to withstand macro-economic shocks. The process must be properly thought through to ensure minimum shocks on the financial system. Care should be taken not to trigger a confidence crisis in the banking system.”

 

Also speaking, the President of the Chartered Institute of Bankers of Nigeria (CIBN), Dr. Uche Olowu, said that there was no need for people to panic or have any fear about the financial system. Dr. Olowu said the announcement of an intending capital increase in the banking sector was a welcome development.

 

“Ordinarily, in other climes, you continue to look at the risks that you will take because of the opportunities that you see in them. You ask them to recapitalize because of the opportunities that will come. We need to beef up the capital base.”

 

Speaking also on the planned policy, the Chief Consultant of B. Adedipe Associates Limited (BAA Consult), Dr. Biodun Adedipe, said the last recapitalization exercise that specified a minimum of N25bn closed on December 31, 2005, and subsequently, minimum selective amounts were specified for market segments for international banks, DMBs, and merchant banks.

 

“A review of the minimum capital requirement for the banks’ categories some 13 years after the last sector-wide review is somewhat appropriate. The economy has expanded no doubt; raising the value of financial and commercial transactions. The banks today are dealing with much larger transactions than they did 14 years ago.”

BLOG COMMENTS POWERED BY DISQUS