By Elizabeth Chukwuma
Godwin Emefiele, the governor of Central Bank of Nigeria, CBN, appears to have sent jitters down the spine of the officials of the deposit Banks across the country as he plans to recapitalise the financial institutions within the next five years to make them contribute more meaningfully to the economic growth of the country.
Emefiele, the CBN, governor, according to the apax Bank sources, believes that that the deposit Banks had not made significant contribution to the country’s economic growth because of low Capitalisation and therefore the need to embark on another round of recapitalisation of the Banks.. He was said to have discussed his economic blue print within the next five years with President Muhammadu Buhari, who was said to have given him the nod to implement it as he was able to convince him of going to turn the economy around.
The CBN governor, who could not n hide the support given to him in the last four years by the President said his ”vision was driven by the need to support continued growth and development of the economy”. He noted that the recent drop -in the commodity prices in the international market which affected a good number of Banks in the country because of their exposure to the oil and gas business , resulted in an increase in non -performing loans of the Banks.
The Delta state CBN governor, noted that as a result of their non performance, the risk management measures embarked upon by the apex bank, such as capital adequacy and liquidity ratios of the nation’s Commercial Banks are now above the ”prudential level. He cited the improvement that had been recorded in the Commercial Banks from 11 percent in June, 2017 to over 16 percent in May, 2019. He further stated that the Banks liquidity ratio levels have also increased by 20 percent.
An elated Emefiele, said the ratio of the non performing loans in the industry has also reduced from 15 percent in 2017 to 9 percent in May, 2019. The planned bank reform may be bad news for the deposit Banks operating in the country as some of them may be forced to go underground if they fail to raise the new operating Capital that may be set by the CBN that could make them contribute significantly to the economy. perhaps, to consolidate on the gains recorded in the last one year in its interventionist policies, emefiele has no option but to contemplate of the rcapitalising the Banks.
Recall that when Muhammadu Lamido Sanusi, a former governor of CBN, and now the current Emir of Kano, raised the operating capital base of the Banks from N2 billion to a premium of N25 billion, he had said that” it was targeted at making the system more effective and strengthening the economy growth potentials”.
Not many of the Banks survived the CBN recapitalisation of the deposit Banks. It was said to have reduced the number of operating Banks in the country from 89 to 25 in 2005 and later to 24. Sanusi, then CBN , governor had told those that care to listen that” since Banks take deposits from the public , there is need for periodic reforms in order to foster financial stability and confidence in the economy” . It was not surprising why many of the Banks were forced to go underground, merge or acquired by the more solvent Banks as it had further reduced to to 15 functional Banks in the country.
At present this is the list of deposit Banks that had survived the Sanusi recapitalisation of the deposit Banks and other various Bank reforms in the last ten years: Access Bank plc, Fidelity Bank plc, First City Monument Bank plc, First Bank of Nigeria plc and United Bank For Africa, UBA, regarded as one of the biggest deposit Banks in Africa, which was made possible through the singular efforts of Tony Elumelu, founder Tony Elumelu Foundation and the Bank Chairman.
Recall that , under Sanusi watch as CBN , governor in 2011 he had ,master-minded the takeover of Afribank, Bank PHP and Spring Bank which were at the Brink of collapse by the Nigerian Deposit Insurance Corporation, NDIC, to bail bail them out. Note that Enterprise Bank was established to take over the assets of of Spring Bank limited, Keystone Bank Limited assumed the assets of Bank PHB and Main street Bank limited assumed the assets of Afribank.
The former CBN governor , who has the backng of then President goodluck Jonathan may have drawn to the ear of the Bank Executive Executives that there is no going back on the recapitalisation policy. This is may have informed why the Bank officials had sent out their marketers to the field to solicit for deposits from Customers , particular traders to beef up their capital base.
Given an insider information about his economic agenda in the next five years, the Delta state born CBN, helmsman had said that he would pursue a programme that would make the economy ”grow by two digits that could boost the nation’s output. He may have gladdened the heart of farmers when he promised financial support to them in the next five years through issuance of soft loans in order to bring down the rate of inflation in the country. the good news was that he has the backing of the Katsina state born Nigerian President.