By Elizabeth Chukwuma
This is not the best of times for the Boards and Management of thevarious Money Deposits Banks, MDBs, operating in the Nigeria, as Olayemi Michaeal Cardoso, a –one time Head of Citi Bank in Nigeria and Commissioner of Economic Planning and Budget, in Lagos state during the regime of Bola Ahmed Tinunu and now governor of Central Bank of Nigeria, CBN, appointed by the same Tinubu, , now President of Nigeria.
This is because Cardoso , the CBN, governor appears to have made due his promise that the apex Bank will come out with new policy reforms that would facilitate the planned recapitalization of Banks footing to put the service providers on a sound financial footing as obtained abroad to be able to play appreciable role in the country’s anticipated N1 trillion economy by 20230 .
The CBN governor, who has wide knowledge of the operations of Banks as Head of Citibank in Nigeria and the backing of the Nigerian President had made it clear to those that cares to listen that that the proposed banking recapitalization was necessary ‘’to protect the nation’s banks from macroeconomic risks and to enable them fund big ticket transactions’’.
The Last time CBN Authorities had given a matching order to the shareholders of the MDBs to inject more funds into their Banks was in 2004, when Charles Soludo, a Professor of Economics, the then governor of he Regulatory Authority and now governor of the south Eastern state of Anambra state raise the Banks’ capital base N25 billion, which the Bank operators ha described as being on the high side and difficult to meet.
Cardoso, the CBN governor, may shocked the current Banks’ Directors and their Management team, sometimes in 2023, when he said that the N25 billion capital requirements set for the Banks to meet in 2004 by a former CBN , governor, cannot make any impact going by the current state of the economy at present. going by the prevailing macroeconomic challenges the country is facing.
Those who knew Cardoso at a close range in the nation’s banking sector may have known that he will not back out in the proposed recapitalization of Banks that they were said to have commenced preliminary mer and acquisition talks with the big Banks like United Bank for Africa, UBA plc, described as a Pan African Bank, Zenith, Access and First Bank of Nigeria, plc, which had had brought into its fold an established investor and business mogul,, Femi Otedola, to become the Chairman, as a way to boost its finance base eyeing the financially weak Banks.
Until Cardoso, led CBN, unveiled the new capital base requirement for the MDBs, with international Authorization to N500 billion, Banks with national authorization to N200 billion, and the new minimum capital base for Banks with regional authorization set at N50 billion, and non- interest banks with national and regional authorization new capital base set at N20 billion and N10 billion respectively on Thursday , 28, 2024, the Presidency had always supported the apex Bank’s Consolidation initiatives expected to help the country to grow the economy to a new height.
Many believe that this is the only way the Nigeria economy to it compete favourably in the future with major world economies like the Asian country of China, North American country of the United States, US, United Kingdom, UK, France, Germany and Japan and even Egypt, south Africa and Kenya, in the African Continent.
Vice President Kashim Shettima, and former governor of Islamic Fudamentalist, BokoHaram and the Islamic State of West African Province, ISWAP, ravage sate , may have spoken the mind of the President when he disclosed that the target is to attract huge investments into the various sectors of the country’ economy , particular, agriculture , oil and gas.
The erstwhile Borno state governor asserted the banks have not option but to prepare ‘’ to fuel the journey of the N1 trn economy by having capital base adequacy’’.
Haruna Mustapha, , the CBN, Director, of Financial Policy, may have put the MDBs Merchant Banks, national and the regional Bank on a high jump, as he has said o have made it clear to the promoters of the Banks that they have between April 11, 2024 and March 31, 2026, to meet the minimum capital base requirement or lose their operating license.
The CBN, governor, who may have read the body Language of the Bank’s Chief Executive Officers, CEO, which shows a complete lack of confidence to raise the new minimum capital base set by the apex Bank was said to have reassured the 24 operating Banks in the country that they have no reason Worry.
He has his reason why the banks will not experience much difficulty in raising the new minimum capital base requirement, as the economy has continued to record significant foreign exchange inflow in the recent months. He has cited the theUS $1.5 billion in this month of March , 2024, indicating that the country has started reaping the full benefits from M the Regulatory Bank monetary policy interventions, to stabilize the country’s Autonomous Foreign Exchange Market.
Hakama Ali, CBN, Director of Corporate Communications may have gladdened the heart of the Bank’s CEOs, when he disclosed that the apex Bank is still concerted efforts ‘’to stabilize the AFEM, corroborating rates. He had corroborated claims of Financial experts of substantial inflows of forex into the country and the naira gaining strength in both at both the AFEM and Parallel, popular, Black markets Recall that VP. Shettima, had said recently to the admiration of Nigerians that the naira would continue to tabilize in the coming weeks and months.
Muhammadu Buhari, immediate past Nigerian President had said that the accomplishments of the Tinubu’s Administrations in the last seven months to rebuild the economy and stabilize the naira must be seen as national achievements’’, as he prayed profusely for the former Lagos state governor in his 72th birthday.
Bismarck Rewane, Managing Director, Financial Derivatives Company Limited, may have corroborated the VP’s claims when he declared that the appreciation of the naira against the US dollar and other world major currencies used for transactions is sustainable if the CBN , could come up and implement the right Monetary and Fiscal policies.
Reports by the Punch Newspapers, one of the nation’s tabloids shows that only 17, out of the 24 licensed operating Banks in the country , may not be able to raise the CBN, new minimum capital requirement from the current N25 billion, thus exposing such Banks to merger and acquisitions by the bigger Banks. The message was very clear that only seven of the Commercial Banks operating in Nigeria at present with international authorization and N200 billion national authorization , may be able to raise the N500 billion and N200 billion minimum capital base in the next two years.
As a prelude to beating the CBN, to it, I the last few months, fbn, HOLDIGS, Wema Bank and Jaiz Banks was said to have announced plans to raise its capital base through the issuance of 3,200 billion Ordinary shares, via public offer and rights issue while some other Banks, may depend on different Capitalizatio methods which include mergers and acquisitions, initial public offerings, and undistributed profited or retained earnings.
