Dr. Muda Yusuf, founder of the Centre for the Promotion of Private Enterprise (CPPE), says the upward adjustment of capital requirements for banks will improve their ability to manage risks and withstand economic shocks.
Yusuf said this in a statement on Friday while responding to the CBN’s announcement on recapitalization requirements for banks.
The News Agency of Nigeria (NAN) reports that the apex bank raised the minimum capital requirement for commercial banks with regional, national, and international licenses on Thursday to ₦50 billion, ₦200 billion, and ₦500 billion, respectively.
CBN also raised the capital base of merchant banks with national licences to ₦50 billion, while it increased that of non-interest banks with regional licences to ₦10 billion and ₦20 billion for those with national licences.
The CPPE boss said every economy deserved a stable and virile banking system, adding that adequate capitalization was a key attribute of banking system stability.
“Meanwhile, it is important to assure the banking public that all our banks are safe and sound. All financial soundness indicators are positive for all our banks.
“The recapitalization story should be managed professionally to avoid creating vulnerabilities for the banks and banking system,” he said.
He commended the CBN for giving banks a year’s notice, saying the timeframe would give the banks sufficient time to strategize for a new capitalization regime.
He said the CBN governor, Mr. Yemi Cardoso, had earlier hinted about the bank’s recapitalization at a Chartered Institute of Bankers of Nigeria (CIBN) dinner in 2023.
“So, the announcement did not come as a surprise. There are strong reasons to justify the recapitalization proposition.
“The last major recapitalization was done in 2004 when Prof. Charles Soludo was a CBN governor, and the minimum capitalization was N25 billion, which was an equivalent of about 190 million dollars.
“At the current exchange rate, this is an equivalent of over N250 billion,” he said. (NAN)
