NSE Ready To Partner CBN On Banks’ Recapitalisation
The Chief Executive Officer, Nigerian Stock Exchange, Mr Oscar Onyema, has said the Exchange is studying the pronouncement made by the Central Bank of Nigeria on the recapitalisation of banks to see how it can serve as a trusted partner in carrying out the process.
The CBN Governor, Mr Godwin Emefiele, had on Monday stated that the total value of the capital base of banks might have been eroded by about $3.5bn.
Emefiele noted that the drop in the value of the naira to the dollar had weakened the capital of banks as the value of a dollar to the naira was about N100 in 2004 when the banks were last asked to recapitalise.
This, he explained, meant that the N25bn capital base of banks when translated into the dollar was about $250m but as a result of the drop in the value of the nation’s currency, which now exchanges for N360 to a dollar, the N25bn translated to about $75m.
Emefiele said going by the huge developmental role the apex bank would want the banks to play in the next five years, it had become imperative to demand their recapitalisation.
Onyema, while speaking during an interview with our correspondent on the sidelines of the Rand Merchant Bank Economic and Business Conference in Lagos on Tuesday, explained that he was not quite sure of what the pronouncement meant.
he said, “What I can say is that historically, if you look at the last big recapitalisation effort for the banking sector, the capital markets were greatly used for raising the financing. It was very beneficial for the capital market to the extent that the market became more sophisticated.
“A lot more players came into the market from the investor perspective and until today, the financial sector is still one of the most liquid of the stocks that are listed on the NSE. So, we know that potentially, it could be very beneficial to the capital market, but we don’t know what the pronouncement means.
“So, it would be premature for me to say anything other than we are studying it and tend to engage to see how we can serve as a trusted partner in carrying out the recapitalisation whenever it happens.”
The Chief Executive Officer, RMB Nigeria, Mr Michael Larbie, said stronger banks, when capitalised, would be good for the economy.
he said, “An important question is, clearly, being big is one thing, but having the right assets and investible industries to lend to sensibly, where you don’t have non-performing loans is a balance we need to have.
“I have no doubt that well– capitalised banks are good for the economy and if that capital raised is deployed prudently, it can create more industry giants and promote economic growth.”