CBN to Strengthens Oversight in Bank Recapitalization
By Patience Ikpeme
To ensure a safe and sound banking system, the CBN has vowed to enforce the fair valuation of banks post-merger balance sheets, adequacy of financial resources and ensure the integrity of financial statements.
This pledge was made by the governor of CBN, Oluyemi Cardoso, while addressing stakeholders in London at the UK-Nigerian Chamber of Commerce on “The Impact of Recapitalisation of Nigerian Banks.
In his remark, he noted that the anticipated impact of the recapitalisation programme will include an increase in banks’ lending capacity, a boost in the volume of foreign direct investment (FDI), and an increase in foreign exchange liquidity.
“With the recapitalisation programme, our goal is to trigger the emergence of stronger, healthier and more resilient banks,” he said.
The CBNs governor who was represented by the Bank’s Deputy Governor, Financial Systems Stability, Mr. Phillip Ikeazor, stressed the on the significance of the event and reassured on CBN’s commitment to fostering stronger, healthier, and more resilient banks capable of withstanding economic shocks and supporting the Government’s goal of achieving a GDP of US$1 trillion by 2030.
Cardoso noted that several factors were responsible for the new minimum capital requirements, which includes; macroeconomic conditions, stress test outcomes, and the need for improved risk management.
He gave the assurance that, “We will rigorously enforce our “fit and proper criteria” for prospective new shareholders, senior management, and board members of banks, and proactively monitor the integrity of financial statements, adequacy of financial resources, and fair valuation of banks’ post-merger balance sheets,” .
Cardoso pointed out that this will pose significant opportunities to investors, policymakers, and technocrats on the critical issue of bank recapitalisation in Nigeria.
He pointed out that upon assumption of office in October 2023, his priorities at the CBN have included achieving monetary and price stability, maintaining a stable exchange rate, controlling inflation, and creating an enabling environment for businesses.
The governor highlighted that the recapitalisation directive excluded retained earnings from the minimum capital requirement to simplify capital calculations and enhance transparency.
Cardoso furtger noted that the decision, rooted in the BOFIA Act 2020, aligns with international standards like Basel III and emphasises core capital elements to improve financial stability.
Considering the successful 2004/5 Banking Sector Reforms, which consolidated the industry, increased capital bases, and boosted resilience against the global financial crisis, the Governor assured that the current recapitalisation initiative aims to build on these achievements
