Recapitalization: Banks Expected to Seek Capital Infusion from Stock Market – Senator

Senator Osita Izunaso has said that banks are expected to approach the stock market to raise capital in order to meet the new minimum capital requirements set by the Central Bank of Nigeria (CBN). Senator Izunaso, who serves as the Chairman of the Senate Committee on Capital Market and Institutions, in a statement praised the CBN’s decision to increase the capital requirements, which will take effect in 2025.

According to him, the measure was critical given the depreciation of the naira, which significantly affected the capital base of banks in recent years. Highlighting the innovative approach of adopting tiered capital requirements based on a bank’s operational scale, he contrasted this with the uniform N25 billion capital base used in the 2005 banking recapitalisation.

The statement reads:

“The new minimum capital requirements for banks operating in Nigeria, with the objective of ensuring a more safe, sound and stable banking system is a welcome development that will help strengthen the country’s financial system in general.

“This new Capital requirement is justified by the negative impact of naira depreciation on the capital base of banks over the years especially following the recent unification of exchange rates.

“The adoption of tiered minimum capital requirements in respect of international, national and regional authorization is commendable unlike the uniform capital base of N25 billion which applied in the 2005 banking recapitalisation exercise.

“In view of the strong link between the money and capital markets in Nigeria with most banks quoted on the Nigerian Exchange, I have no doubt that the successful implementation of this exercise will have salutary impact on the capital market.” He said.