Uche Uwaleke, an expert and Capital Markets Professor, anticipates that the revitalization of commercial bank capitalization could breathe new life into the stock market.
In an interview with the News Agency of Nigeria, Uwaleke expressed approval of the Central Bank of Nigeria’s proposal, deeming it a positive step forward.
He emphasized the necessity of capital to fund significant projects, especially considering the government’s aspirations for a $1 trillion economy in the coming years.
Recalling the last instance of CBN’s enforced bank recapitalization in 2004 by former CBN governor Charles Soludo, which raised the banks’ capital base from N2 billion to N25 billion, Uwaleke highlighted the potential incentives. He proposed differential cash reserve requirements and preferential participation in the forex market for well-capitalized banks as potential incentives.
“It should be more about incentives than coercion. Some Deposit Money Banks are already making efforts to increase their capital base. The CBN can use prudential guidelines to strengthen the present tiered arrangements.
“The use of the CAR (the ratio of a Bank’s capital to risk-weighted assets) is a good example. For whatever it is worth, smaller banks playing at the regional level should not be regulated out of existence,’’ Uwaleke said.
Earlier, the Chartered Institute of Bankers of Nigeria led by its President, Dr Ken Opara, had said that banks were ready for recapitalisation.
NAN
