By Tony Obiechina, Abuja
The Director of Capital Market Studies at the Nasarawa State University, Keffi Professor Uche Uwaleke has applauded the decision of the Central Bank of Nigeria (CBN) to raise the minimum Capital requirements for banks.
The apex Bank had on Thursday unveiled new minimum capital requirements for banks, pegging the capital base for commercial banks with international authorisation at N500 billion.
Confirming the development in a statement by the CBN Director of Corporate Communications, Mrs Hakama Sidi Ali, the new minimum capital base for commercial banks with national authorisation is now N200 billion, while the new requirement for those with regional authorization is N50 Billion.
Reacting to the apex Bank’s decision, Professor Uwaleke said the move is a welcome development that would help to strengthen the country’s financial system and also a potential boost to the stock market.
In statement made available to Promptnewsonline in Abuja last night, Nigeria’s first Capital Market Professor said:
“In view of naira devaluation following unification of exchange rates, the new caliberated minimum capital requirements seem okay unlike the uniform capital base of N25 billion stipulated in 2005.
“If my memory serves me right, this was permitted in 2005 but now disallowed possibly from the experience of the last exercise.
“I believe the FUGAZ (FBN, UBA, GTB, Access and Zenith) banks with international authorization will have no difficulty meeting this requirement.
“The stock market (Option 1) presents the most feasible option as few will likely go the M&A route. Access Bank has already announced it is raising N365 billion via Rights issue.
“I also think the 2 years period allowed is sufficient to implement recapitalisation. READ ALSO:
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A number of Banks including FBN, Access and Fidelity had already commenced the process of recapitalisation before now, especially since the CBN Governor made the announcement in November last year.
“I equally think that since the new capital base is based on the type of authorization (International, National or Regional), the CBN may consider applying a differentiated CRR according to the category of license instead of a uniform rate (currently 45%) for commercial banks.
“In view of the young age of Non Interest Banks in Nigeria, they should be allowed a longer period, say, 3 years to meet the minimum capital requirements”
