Nigerian banks have the financial capacity to meet the minimum capital base set by the Central Bank of Nigeria (CBN), the Association of Corporate & Marketing Communication Professionals of Banks (ACAMB) has said.
Last week, the apex financial sector regulator gave all commercial banks in the country 24 months to raise their capital bases from the current N25 billion to a minimum of N200 billion.
The directive was conveyed in a circular by the Director, Financial Policy and Regulation Department of the CBN, Haruna Mustafa, to all commercial, merchant, and non-interest banks as well as promoters of proposed banks in the country.
The circular gave all commercial banks with international authorisation the next 24 months to raise their capital base to a minimum N500 billion, while their counterparts with national authorisation would now be be expected to have a minimum of N200billion capital base.
Also, those with regional authorisation would have a N50 billion capital base, same as merchant banks, while non-interest banks with national and regional authorisations would be required to have a minimum capital base of N20 billion and N10 billion, respectively.
Since the release of the circular, there has been palpable tension among operators in the sector, who are afraid the banks may not be able to meet the regulatory target.
But, the ACAMB not only welcomed the directive by the apex bank, but expressed the confidence that the banks would meet and exceed the target.
The President of ACAMB, Rasheed Bolarinwa, who described the CBN circular on the banking sector recapitalization as much-anticipated said his Association, as a key player in Nigeria’s banking sector, had, alongside other critical stakeholders, affirmed support for the exercise.
“This support underlines ACAMB’s belief that while Nigerian banks are globally regarded as safe, resilient and thriving, there is always room for growth. As Nigeria seeks to aggressively unlock its innate potential to become a global emerging economy, banks must also stand ready to play their crucial roles of financial intermediation,” Bolarinwa said in a statement.
The CBN circular on review of minimum capital requirement for commercial, merchant and non-interest banks over the next 24 months, he said, has laid to rest any anxiety about the intention, process and possible outcome of the new recapitalisation exercise.
The import of the recapitalisation announced, he pointed out, was that Nigerian banks were safe and reliable, but the apex bank in its developmental mandate, was leading the banks to strengthen their capacities to meet competitive domestic and global financial needs.
He said the overarching theme that runs through the circular and its explanatory notes further affirmed the soundness of the banking sector, in line with several rating reports on Nigerian banks by leading local and international rating Agencies.
“We commend the CBN for the thoughtfulness it has put into the announced modality for the recapitalisation. ACAMB particularly notes the distinctive definition of the new minimum capital base for each category of banks as the addition of share capital and share premium, as against the previous use of shareholders’ funds.
“We urge the public to take note of this change. As it stands, banks are on the same page and as such, there is no need whatsoever for any fear, as banks have capacity to meet the recapitalisation in line with allowable options stipulated by the apex bank.” The ACAMB President said.
He said all facts point to a win-win for the Nigerian banks, adding that the financial market and the economy under this recapitalization would be the better for it.
The Nigerian capital market, where banks are the most influential group, he observed, has the depth to meet the capital requirements of banks.
The extended timeline till 2026, he pointed out, provides ample opportunity for each bank to follow through its recapitalisation plan, without undue crowding effect.
With their background of good returns and liquidity, he said banking stocks were the toasts of domestic and foreign investors, adding that this pedigree, coupled with resilient performance of banks, despite economic challenges, would come to the fore as investors know the recapitalisation means stronger banks and better returns.
“The banking industry will continue to work with financial authorities to build up the economy. This recapitalisation will put Nigerian banks in better stead to support the strengthening of the economy; the expansion of the real sector, and the building of bigger banking brands that can compete continentally and globally.
“Banks will continue to cooperate with the CBN in the implementation of the recapitalisation programme,’’ he assured.
Bolarinwa said ACAMB would also be engaging all stakeholders in order to ensure balanced and factual representation as the recapitalisation progresses.
The Association, he said, has reassures all depositors and shareholders in financial sector to go about their businesses with the Nigerian banks without fears.