The Central Bank of Nigeria has said that it will call for bank recapitalisation to service Nigeria’s $1trn economy. The governor of the Central Bank, Yemi Cardoso made the disclosure on Friday during his keynote address at the 58th Annual Chartered Institute of Bankers Dinner....CONTINUE READING
Cardoso said, “Despite the challenging global economic environment, Nigeria’s financial sector has demonstrated resilience in 2023 with key indications of financial soundness largely meeting regulatory benchmarks.
“Stress test conducted on the banking industry also indicates strength under mild to moderate scenarios of sustained economic and financial stress. There is still much to be done for fortifying the industry for future challenges.”
He said the President Bola Tinubu administration hopes to achieve a N1trn economy in the next seven years which banks may not have the funds to meet the requirements of such an economy.
Cardoso said, “Attaining this substantial target necessitates sustainable and inclusive economic growth at a significantly higher pace at a current level. Considering the projected economic growth, it is crucial for us to evaluate the adequacy of our banking industry to serve the envisioned larger economy.
“It is not just about the stability of the financial system in the present moment… However, we need to ask ourselves, will Nigerian banks have sufficient capital relative to the financial system needs to service a $1trn economy in the near future?
“In my opinion the answer is no unless we take action. Therefore, we must make difficult decision regarding capital adequacy. As the first step, the Central Bank will be directing banks to increase their capital.”
The minimum paid-up share capital to be maintained for a National level banking license is N25bn or any such amount that may be prescribed by the Central Bank of Nigeria, while for a Regional Banking License is N10bn and International Commercial Banking License is N50bn.
Cardoso also said recent developments in the payment services landscape have raised concerns regarding the use of technology and existing licensing and regulatory framework.
“We have observed that some licensees are operating outside their approved licenses, breaching the boundaries set for them. Any intentional or unintended non-compliance will be subject to sanction as operators have the responsibility to ensure that they are licensed for the activities they undertake,” he said.
According to the CBN governor, the bank is developing a new regulations and compliance suitable for the technology-driven payment services sector.
