The Chartered Institute of Bankers of Nigeria has envisaged the need for the commercial banks in the country to recapitalise again.
President, CIBN, Prof. Segun Ajibola, spoke against the backdrop of the fears in the banking industry of a looming distress due to the weak liquidity status of the commercial banks, considered as extremely low by international standards.
Ajibola, who spoke to our correspondent in support of the call by the Nigeria Deposit Insurance Corporation on banks to recapitalise, said that doing so had become imperative to enable the banks meet up with the current reality in the industry.
He said that the prevailing economic situation in the country had necessitated the enhancement of the capital base of the various commercial banks operating in the country.
Ajibola said, “When the call for the banking sector recapitalisation and consolidation was made by the then Central Bank Governor, Prof. Charles Soludo, banks’ capital base was very low; the price of dollar in operation was between N105/N110 and the maximum price was N120 to a dollar.
“Then, from 2005 and 2006, the apex bank mandated all commercial banks to beef up their capital base to the tune of N25billion. But today, the price for the dollar is now N305/N310 in the official market, and in the black market, the price is even as high as N360.”
The CIBN president noted that the Nigerian banks played more role in the global market, adding that the capacity of the banks was determined by their financial muscle within the economy, which must meet global operating and competitive standards and which ultimately would attract foreign investment to the economy, based on the competitive edge of the banks to meet current global standards.
He, however, said that the benchmark of standardisation was completely being eroded by the banks as the industrial standard by the CBN was just about five per cent.
Ajibola added that although Nigerian banks had been hovering around 12 and 15 per cent regularly, this was not good enough and would ultimately affect shareholders’ funds.
He regretted that the banks were feeling the heat to recapitalise with the demands by the various regulatory authorities so as to meet up with global and international best practices.
The CIBN president also said that the institute needed an amendment to its enabling Act in order to sanitise the nation’s banking sector.
