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CBN: Presidency supports recapitalisation of Nigerian banks

President Bola Ahmed Tinubu, GCFR

*President Bola Ahmed Tinubu states that in an effort at attaining the planned $1 trillion economic destination, his administration must address the capital adequacy of the Nigerian Deposit Money Banks to ‘provide the fuel for the journey’

Isola Moses | ConsumerConnect

The Presidency has said it backs the Central Bank of Nigeria’s (CBN) current proposal to jack up the capital base of the Deposit Money Banks (DMBs) in the West African country.

ConsumerConnect reports

President Bola Ahmed Tinubu stated this Tuesday, November 28, 2023, in a goodwill message at the 40th anniversary of The Guardian Newspapers in Lagos.

Tinubu, represented at the event by Mr. Bayo Onanuga, Special Adviser to the President on Information and Strategy, stated that banks’ recapitalisation exercise is crucial to achieve a $1 trillion economy.

Tinubu also said: “Amidst the general lull in global economy, our ambition to attain a $1 trillion economy appears daunting.

“But we believe it is achievable, with God on our side and our collective determination.”

The Nigerian leader noted “this explains why the Vice President and I have been on the road, trying to attract huge investments in various facets of our economy: agriculture, oil and gas, renewable energy and others.

“To arrive at the $1 trillion economic destination, we believe that we must address the capital adequacy of our banks that will provide the fuel for the journey.”

It is recalled Dr. Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN), in his Keynote Address at a recent event in Lagos, disclosed the Nigerian commercial banks would be directed to increase their capital base.

The commercial banks, Cardoso stated, currently don’t sufficient capital relative to the finance system needs in servicing a $1trillion economy.

“Considering the policy imperatives and 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 at the moment as we have already established at the current assessment to show stability,” said the CBN Chief.

He, however, said: “We need to ask ourselves: will Nigerian banks have sufficient capital relative to the finance system needs in servicing a $1trn economy in the near future? In my opinion, the answer is ‘No’ unless the we take action.

“Therefore, we must make difficult decisions regarding capital adequacy. As a first step, the Central Bank will be directing banks to increase their capital.”

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