The banking sector should brace up for fresh recapitalization within next five years, governor of Central Bank of Nigeria, CBN Mr. Godwin Emefiele announced Monday in Abuja as he unveiled apex bank policy direction for next five years.
Speaking on the banking recapitalization, Emefiele disclosed of plan by apex bank to pursue a program of recapitalizing the banking Industry in the next five years so as to position Nigerian banks among the top 500 in the world.
To this end, he added that banks will be required to maintain a higher level of capital, as well as liquid assets in order to reduce the impact of an economic crisis on the financial system.
Though Emefiele wasn’t specific on new recapitalization threshold for banking sector, he said new recapitalization for banks is an exercise long overdue with the last one 2004 carried out by former CBN governor, Prof. Charles Soludo.
“You will all agree with me that it was governor Soludo in 2004 that did the last recapitalization moving the capitalization from N2 billion to N25 billion. I must commend those efforts because it resulted in positioning Nigerian banks not only in Africa but also being among the top banks in the world in terms of capitalization and also helped to increase and strengthen the banks’ capacity to take on large ticket transactions and those are some of the things we badly need today.
“If you relate it N25 billion in 2004 exchange rate which was about N100/$ N25 billion is almost about $200 million today if you relate N25 billion at 360, you can see that it is substantially lower than $75 million so what we are trying to say is that the capitalization has weakened quite substantially, and there is a need for us to say that is time to recapitalize Nigerian banks again. It is a policy trust, which will be discussed, at the Committee of Governors meeting and of course, the framework for the recapitalization of Nigerian banks will be unfolded for the whole world to know”, he said.
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