Dialpad:
Will this not lead to layoffs and closure of branches etc

I see them using less human to significantly reduce costs

Lol.... ask question, ask question.
Thats how to learn.

References1:


#CableIndex

Previous Thread
https://www.nairaland.com/8045096/cbn-pegs-minimum-capital-base#129158987

Fact is that all Nigerian banks are sick and have been mismanaged for years ..

What of the smaller banks.

Anyway, RIP to our UBA

When they are taking of billions, workers salary is insignificant. Less than chicken change.

ppogba:


CBN Governor is clueless?
Wonderful!

Even if he issues IPO, how many Nigerians can purchase and for what?
Stupid question from someone calling another clueless.
Many Nigerians will buy for themselves and even for their children because they know what shareholding means.
Do not speak for all Nigerians based on your own personal economic situation or handicap.

Why would any Nigerian want to tie up their money in shares?
Another stupid question from someone uncultured enough to label man presumably old enough to be his father a fool.

Shareholding for you is tieing down capital? What happens to capital appreciation over time?

Why can he issue FG bonds instead?
We are talking about bank recapitalisation and Mr. Wise man is talking about issuance of bonds. Pathetic!
Is is the issued bonds that will recapitalize the banks?

If I have to address the issue of the bond issuance, I may have to educate you.

You are too crude for that education.

Endeavor to be too quick to advertise your ignorance. Though I recognize the fact that Nairaland seems to be the meeting point for the ignorant once like you.

Ok Mr smart man, what is the essence of the recapitalization and why exclude BDCs and micro-finance banks from it? I was going to take on you further but when you said capital appreciation I realised that you are an illiterate. Access bank share price was 9.75 on 1st January 2014 now it stands at 10. How much appreciated for someone who invested 10 million 10 years ago? What is now the value of his 10.75m in our present economy compared to it 10 years ago? Would he have made more money investing his 10 mill in maybe a landed property or even FG issued bonds at 13% p.a? You are financially illiterate to even discuss with me. I mean for you to even say capital appreciation in shares or stock trading don't you know that share prices fluctuate and if you invest today you could make a killing tomorrow but lose over 10 years? Olodo

Babangidapikin:
Did CBN consult with them before throwing this out there ...abeg o we don't want merge of the big banks they are not the problem but the micro bank that are too many, of course some of them are needed especially those in remote location but still they are just too many .. and the timing is wrong sef ...you need to show your economy is strong to attract investment.. merger isn't FDI or LDI... rather you are just offloading more proffessionals into the Job market.

my only grouse in all of these is that this is a govt created inflation and problem. Now they are even creating more problems in trying to solve the problem they created.

Pray tell me why businesses wouldn't want to hedge in dollars? Banks that were all doing well a year ago, are now thrown into possible mergers and acquisition courtesy of govt policy. Currency devaluation, petrol subsidy removal... Cruel policies that brought us here.

Bennycollins:
I understand they all have to recapitalise over a period of two years. That is a long enough time. They just have to cut cost, maximize their PATs and retain much of the earnings over two trading periods and they are done. They may not necessarily resort to M&A.
Yes retrenchment may come in, the only drawback I see here, and maybe reduced dividends payouts.

The recapitalization excercise does not factor in retained earnings which is why most banks would be looking outward. If the entire shareholders fund including retained earnings was the basis of this recapitalization then most international banks won't have any issue. So trying to boost retained earnings is not the way to go.


The way to go rn is to ramp up share prices on the bourse, so that they won't have to issue too many shares that would dilute earnings. Or try to get FDI to come in.

Dobodobo04:



Daft?? Wrong choice of word!!

CBN probably using it to mop off Naira off the system.

the same naira Emefiele was mopping and Tinubu said it was designed to prevent him from being president.

Wow.. I just came here to learn.

Oyerinde16:
What it means is that.
1. Banks must have 500b untouched in reserve, they can only take it or cash it if they want to close or shut down the bank.
2. Banks will begin to look for ways and means to gather this money, either by savings, merging, borrowing and or using stringent or dubious methods to get the money.
3. Banks would need more marketing staffs to pay less but bring in more money into the bank.
4. Most banks would borrow to stand alone then spend years paying back the loan
5. Some banks would just merge to meet the target then consolidate and move on without owing.
6 you can add your own

The available options for the banks to raise the minimum capital include, but not limited to (1) Through the capital mkt (public offer); (2) by right issue (selling shares to existing shareholders); (3) by private placement( contacting rich individuals privately to buy shares with them). Any other method use by the banks may not be accepted by the CBN.

Dobodobo04:



Daft?? Wrong choice of word!!

CBN probably using it to mop off Naira off the system.

How do you use recapitalization to mop up liquidity? Please stop saying shit you don't know.

PNomsule:


No. 4... banks cannot use shareholders funds (or borrow). They however can raise funds through ipos, merger, acquisitions, increased savings.

is there any international bank supporting MCA system for mutual funding a merchant cash advance is an alternative type of business financing that advances a lump-sum payment based on future credit or debit card sales. You're essentially guaranteeing the advance with future revenue.

kingzjay:
There was a country!!!

Yes, Biafra.

43Ronin:

Ok Mr smart man, what is the essence of the recapitalization and why exclude BDCs and micro-finance banks from it? I was going to take on you further but when you said capital appreciation I realised that you are an illiterate. Access bank share price was 9.75 on 1st January 2014 now it stands at 10. How much was appreciated for someone who invested 10 million 10 years ago? What is now the value of his 10.75m in our present economy? Would he have made more money investing his 10 mill in maybe a landed property or even FG issued bonds at 13% p.a? You are financially illiterate to even discuss with me.

You do recapitalization to boost a banks ability to generate funds and also withstand adverse economic conditions. This is hinged on their position as a deposit bank, that hold funds on behalf of the public. MFBs have a required capital base because they function as banks do albeit in a lower capacity. Now, what characteristics do BDCs have for the CBN to ask for recapitalization lol?

This access bank
Assessed money oh.

What of First Bank , Stanbic Bank and others

ednut1:
Banks will merge. branches in same locations become redundant and people get laid off.

By international spread, that means banks with operations in the abroad? If so, which banks do you see/project amassing half of a trillion naira solely? Also, which do you see merging (assuming they have international spread too)?

CartelKenneth:
Mergers and acquisitions galore loading
The big fish wil eat the small fish 😂😂😂
Bye bye keystone, sterling , fidelity and fcmb!!!

Banks are classified into different tiers.

Don't lump them together.

Blazetrailer:
Two illiterates.....blind correcting blind....you cant use bank capitalisation to mop up excess liquidity...it is not a monetary policy tool for managing inflation.

Banks would have to get the money somewhere?

They would charge customers more interest on loans, pay less rates on savings, etc. Would u agree?

43Ronin:

Ok Mr smart man, what is the essence of the recapitalization and why exclude BDCs and micro-finance banks from it? I was going to take on you further but when you said capital appreciation I realised that you are an illiterate. Access bank share price was 9.75 on 1st January 2014 now it stands at 10. How much appreciated for someone who invested 10 million 10 years ago? What is now the value of his 10.75m in our present economy compared to it 10 years ago? Would he have made more money investing his 10 mill in maybe a landed property or even FG issued bonds at 13% p.a? You are financially illiterate to even discuss with me. I mean for you to even say capital appreciation in shares or stock trading don't you know that share prices fluctuate and if you invest today you could make a killing tomorrow but lose over 10 years? Olodo

No need arguing with someone who says Access Bank shares today stands at N10.

OGUAF:


Just to add to what you've said

There's something called Tier 1 and Tier 2 capital for banks. Its used to caculate their capital adequacy ratio. Basically Tier 1 capital plus Tier 2 capital divided by their risk weighted assets( primarily the loans they have issued using customers deposits)gives you their capital adequacy ratio

Recapitalisation of banks has to do mainly with their "Tier 1 capital which covers shareholders equity(retained earnings, paid in capital etc) on their balanced sheet.

While Tier 2 capital is subordinated capital e.g debts and bonds they raised.

The most likely way out for banks is to issue new shares or merge

You know your onions but most people can't relate to your writeup. Too technical.

If you can use plain, simple English to explain for them to relate to.

Trojan8:


How do you use recapitalization to mop up liquidity? Please stop saying shit you don't know.

Because banks would have to pass it to customers, don’t u agree?

I’m not illiterate. The fiscal system is still in its infancy, monetary tool of selling bonds and increasing interest rate are being deployed.

Asking banks for recapitalisation which CBN knows they will pass to customers is another subtle way of mopping up liquidity.

Noted

Trojan8:


What relationship does increasing capital base have with reducing costs?

The way some of you jump on issues that you have zero understanding of ehn.

it has an indirect relationship. Banks that are unable to meet-up with this new capital requirements will either lose their licences or get them downgraded to lesser status. An international bank can lose its licence to become a national bank and so on.

When a national bank loses its national licence, it might become a regional bank. What happens to the branches in the regions it chooses not to operate? Staff will be retrenched in such places.

This is nonsense policy from the docile CBN gpofnor.

FreeStuffsNG:

Union bank has sold its London branch to Fidelity bank and it is currently owned by FG.

May God bless Nigeria for ever! Check my signature for free stuffs!

Union bank is 94% owned by the owners of Titan Trust bank....it was delisted from the NGX last year ending and has finally gone private

Dialpad:
Will this not lead to layoffs and closure of branches etc

I see them using less human to significantly reduce costs

Shares would be sold to the public and those hoarding dollars would have the opportunity of investing them in shares. Nevermind, the Banks would meet up.

Dialpad:
Will this not lead to layoffs and closure of branches etc

I see them using less human to significantly reduce costs

Lol, the reverse is the case bro. Meeting the new capital base means expansion in business and that implies the need for more hands. You talk about lost of job when it comes to banks that can't meet up with the capitalization and then opt for merger/ acquisition

43Ronin:
Honestly this CBN governor is just very clueless! Where will commercial banks get the funds from? Even if they issue IPO how many nigerians can purchase and for what exactly? Why would any nigerian wan to tie their funds as shares?Does this fool even realise that the eventual mergers will lead to lay-offs? Thereby increasing the unemployment situation in a country where farming is basically a deadly job? Gosh! Why can't he instead issue federal govt bonds at massive interest rate like 15% so that he can mop up excess liquidity in the economy thereby dropping inflation? Then govt invest the funds into capital projects?

Stop publishing your poverty mentality, you will be there when Nigerian banks will meet up with the new capital base requires.

Elobolo:


Because you work in Access Bank HR right You sat on the board to lay off staff right?

keep quiet when you dont know something about a particular matter rather than making a fool of yourself.

Yes, that person is correct. There was massive layoffs.

You didn’t have to be in HR or a board member to know. The people that were laid off weren’t spirits.

People like you are actually disgusting…. ITK.

See him name sef… olobolo. How will you know what’s happening around you?

KingLennon:
Many workers will be retrenched and the suffering will increase. The banks will increase charges rate and the common man will still suffer it. Who dey advise BAT sef?









When stupid people are at the helm of affairs in the country, the people suffer

Oga, stop talking like a slowpoke

It’s funny how some NLers boldly dabble into topics they know next to nothing about. With full chest o