The ongoing bank recapitalization efforts will be tougher according to the Governor of the Central Bank of Nigeria (CBN) Olayemi Cardoso.
He dropped the clue yesterday that this is to ensure that all banks that scale the hurdles will be strong enough to withstand the headwinds—to drive the economic target of the government, which is to achieve a 1 trillion dollar Gross Domestic Product (GDP) mark by 2030.
The plan is to strictly scrutinize the financial institutions as they move towards recapitalization. The CBN governor who spoke in London at an event by the United Kingdom-Nigeria Chamber of Commerce was represented by deputy governor (Financial Systems Stability) Phillip Ikeazor.
Cardoso said “The CBN will rigorously enforce our fit and proper criteria for prospective new shareholders, senior management and board members of banks.” Adding that the apex bank will ensure all banks have sufficient capital to meet their operational needs and manage risks effectively.
Cardoso said the CBN will scrutinize the financial health of the merged entities to ensure a realistic assessment of their financial position emphasizing that the core objective of the recapitalization programme is “to trigger the emergence of stronger, healthier and more resilient banks.”
The CBN governor listed the anticipated gains of recapitalization to include strong banks that are expected to lend more money to businesses and individuals, stimulating economic growth; a more stable and secure banking system capable of attracting greater foreign investment; and improved financial health which will lead to a more stable foreign exchange market.
Others are stronger capital buffers that will allow banks to manage risks more effectively; and improve financial health, leading to better credit ratings for Nigerian banks, making it cheaper to borrow money; diversified ownership base as the programme is expected to encourage broader participation in bank ownership; stronger oversight and stricter criteria that could lead to improved decision-making within banks and increased market volume and value that will give rise to a healthier banking sector and ultimately lead to a more vibrant stock market.
