CBN: Cardoso Raises Capital Base Requirements For MDBs, Other Banks

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.

Prof. Soludo:A former governor of CBN, now governor of Anambra state, who initiatied recapitalization of Nigerian Banks in 2004

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.  

Rewane: Appreciation Of naira sustainable with CBN implementation of right Monetary policies

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. 

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