“CBN Governor Olayemi Cardoso highlights the significance of bank recapitalization in Nigeria, aiming to create stronger, more resilient financial institutions capable of supporting economic growth and stability.”
The Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, has emphasized the critical importance of bank recapitalization in fostering stronger, more resilient financial institutions. Speaking at the UK-Nigerian Chamber of Commerce in London on June 25, 2024, Mr. Cardoso underscored the CBN‘s commitment to collaborating with financial institutions, fiscal authorities, and the National Assembly to ensure a successful recapitalization exercise.
Represented by the Bank’s Deputy Governor of Financial Systems Stability, Mr. Phillip Ikeazor, Mr. Cardoso highlighted the anticipated benefits of recapitalization, including enhanced lending capacity, increased foreign direct investment (FDI), and improved foreign exchange liquidity. He noted that the initiative aims to support the Nigerian government’s goal of achieving a GDP of US$1 trillion by 2030.
“With the recapitalization programme, our goal is to trigger the emergence of stronger, healthier, and more resilient banks,” Mr. Cardoso stated. He elaborated on the numerous benefits, such as GDP growth, better risk management, improved credit ratings, diversified ownership bases, enhanced governance and strategic decisions, and a more vibrant equity market.
Mr. Cardoso explained that the new minimum capital requirements were influenced by macroeconomic conditions, stress test outcomes, and the need for improved risk management. He assured stakeholders that the CBN would rigorously enforce its “fit and proper criteria” for prospective new shareholders, senior management, and board members of banks, while proactively monitoring the integrity of financial statements and the adequacy of financial resources.
Reflecting on the successful 2004/5 Banking Sector Reforms, which consolidated the industry and increased capital bases, Mr. Cardoso expressed confidence that the current recapitalization initiative would build on these achievements. He highlighted the exclusion of retained earnings from the minimum capital requirement to simplify capital calculations and enhance transparency, aligning with international standards like Basel III.
Since assuming office in October 2023, Mr. Cardoso has prioritized achieving monetary and price stability, maintaining a stable exchange rate, controlling inflation, and creating an enabling environment for businesses. He stressed the significant opportunity the recapitalization presents for engaging investors, policymakers, and technocrats on the critical issue of strengthening Nigeria’s banking sector.
By focusing on these strategic priorities, the CBN aims to create a more robust financial system capable of withstanding economic shocks and supporting sustainable economic growth.
