CBN:Bank Officials Jittery Over Planned Recapitalisation

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.

Tony Elumelu: Chairman , UBA, Ready For The Recapitalisation Of The Banks

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.   

Others   are Guranty Trust Bank lc, popular GTB,  Union Bank plc,  and Zenith Bank plc, Stanbic IBTC Bank plc,  Sterling Bank plc,  and Wema Bank This is in addition to heritage Banking Company  limited,  Citibank Nigeria limited, Ecobank plc,  Keystone Bank limited,  Polaris Bank limited ,  successor to Skye Bank plc , which was recently acquired by the NDIC, at the instance of Emefiele, the CBN , governor, Standard Chartered, Sterling, Unity and Wema Bank plc.

  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.

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