New CBN Capital: 25 Banks Need N3.89trn Fresh Funds To Meet Requirements by ijustdey: 9:49am On Mar 30 |
Going by the new capital requirements released by the Central Bank of Nigeria (CBN) for commercial, non-interest and merchant banks on Thursday night, 25 banks operating in Nigeria would need to raise not less than N3.894 trillion in fresh capital to meet up with the new minimum capital base.
This is as the apex bank have been cautioned to watch out for inflows of illicit funds that may be directed towards the capitalisation bid of the banks.
Having mentioned late last year at the Bankers Dinner in Lagos that the apex bank would beworking on a recapitalisation bid for the banking industry to cater to the $1 trillion economy that is being targeted by the President Bola Ahmed Tinubu led government, the Dr Olayemi Cardoso-led CBN made good its word with a steep increase in the required capital base for commercial, non interest and merchant banks in the country.
According to the new requirement, commercial banks with international licenses are required to have a capital base of N500 billion while their national and regional counterparts are required to have capital base of N200 billion and N50 billion respectively.
Similarly, the capital base of national non-interest banks were raised to N20 billion while that of regional non-interest was raised to N10 billion. Merchant banks capital base was also raised to N50 billion.
LEADERSHIP findings showed that while the fate of some banks with holding company structure are not fully clear, nearly all the banks with the exception of the two regional non interest banks met the new capital base. Taj Bank and Lotus Bank both have currently more than the N10 billion that is required for them to continue operation.
In total, the 25 banks surveyed by LEADERSHIP showed a cumulative N2.049 trillion in paid up capital and share premium. This means that the banks would be needing a total of N3.894 trillion to meet up with the new capital base should they decide against mergers, acquisitions and reclassification.
Speaking on the capital base, Head of Financial Institutions at Agusto & Co, Ayokunle Olubunmi noted that whilst the recapitalisation bid will see another interesting couple of years in the banking industry, the CBN has to be cautious in ensuring that the industry is not flooded with illicit funds.
According to him, the apex bank will have to shore up its oversight and regulatory functions to ensure that flow of funds from terrorism, corruption and illicit proceeds are not laundered through the recapitalisation of banks.
“The CBN will have to ensure that proceeds from drugs and terrorism does not come in. Secondly, the CBN also need to ensure that it recapacitate itself such that they have the tools, the capacity to supervise the bank of such sizes. Because one major thing we have realised is that after the recapitalisation exercise, CBN is not able to supervise those banks and those are the things they should watch out for.
“And on the part of the bank, the banks need to be careful because if they are not careful with the merger and acquisition and other events that may come again, they need to be carefully that they don’t have a marriage of strange bedfellows. They need to ensure that the person they bring onboard is someone they have the same vision with, because that can ultimately kill the brand.”
Olubunmi stated that whilst everyone was expecting recapitalisation, “the format which the CBN went about it is not what everybody expected. Everybody was thinking about shareholders fund but they surprised everyone by coming from the angle of paid up capital instead of shareholders fund that was traditionally used. All the banks will be required to actually go to the market and raise capital.
“But the banks have two years, it is not something that if they don’t do it now, they will be in trouble. The other thing is that this is just the beginning and I’m sure that will there will be a lot of engagement. The banks will push back, particularly with the paid up capital, they will push back and may even ask the CBN to add retained earnings to it.
“If the CBN sticks to its decision, the banks will have to bring in institutional investors, and some will either merge or leave the industry. There would also be the option of scaling down to meet the recapitalisation so it is a lot of interesting times ahead
“Another thing is that the CBN wasn’t to use this to galvanize the inflow of dollars. because each of the banks will need the money required for recapitalisation and may have to source for investors outside the country, increasing the inflow of dollars that will help the industry.
On her part, Group head of Global Markets at Parthian Partners, Ronke Akinyemi said the new bank recapitalisation requirements by the CBN is a step in the right direction as it will eventually result in a more robust financial system. Though steep, we believe the time frame given will allow room for the current banks to meet the requirements before the deadline.
“Ultimately, we envision that this new recapitalisation requirement will result in increased foreign direct investments which will in turn help to stabilise the naira, thus we expect to see rounds of capital raises especially with the restrictions of the capital requirement to share capital and share premium. In addition, we envisage that there will be mergers between tier 1&2 banks and also among tier 2 banks to meet this new requirements.”
Speaking on this, the vice president, Highcap securities Limited, Mr. David Adnori said that the new capital base will be judged by the combination of the paid-off capital and share premium.
He noted that a lot of the banks that have large reserves and they will need to capitalise on their reserves, by converting them into paid-off capital, saying that if a lot of the banks do that, a lot of them will massively surpass that figure.
Adnori noted that the emphasis is mainly on banks with international operations and one can see the rationale behind the huge increase for those commercial banks with foreign exposures through their foreign operations because of the depreciation of the naira.
He pointed that a lot of those banks already have a lot of amount in their reserves which become capitalized. But some of them have also opted to go afresh, to raise fresh capital from the capital market, to increase their paid-up capital base.
He added that the fear now is that if a lot of them besiege the capital market to raise capital, then they will be crowding out funds from the real productive sector that has a serious shortage of capital.
“So, one would actually have expected that public policy should be aimed at shifting capital to recapitalise the productive sector, and not again to shift capital from the economy to the banking sector that is already well capitalized,” he said.
The doyen of the Nigerian Exchange Limited, Rasheed Yusuf, said stated that the local bourse can support such a major capital raise, even without the presence of foreign investors.
An economy and capital market analyst, Rotimi Fakayejo said “the market will support it with the deadline of 24 months. At such a time, Foreign Portfolio Investors would have started returning to the market gradually.”
Based on this, under the commercial banks with international authorisation of N500 billion; Access Bank, Fidelity Bank, FCMB, First Bank, Guaranty Trust Bank, Union Bank, United Bank for Africa and Zenith have with a total amount of paid-up capital and share premium to be N251.81 billion, N129.71 billion, N125.29 billion, N251.34 billion, N138.19 billion, N148.09, N115.82 billion, and N270.75 billion, respectively. This shows that the institutions will be raising capital to meet up with the new capital base of N248.19 billion, N370.30 billion, N374.71 billion, N248.66 billion, N361.81 billion, N351.91 billion, N384.19 billion, and N229.25 billion, respectively.
Also, out of the Commercial Banks operating all over the country, EcoBank Nigeria met the new capital base as the Bank’s issued share capital and share premium stood at N353.51 billion exceeding the N200 billion new capital base. The paid-up capital and share premium of CitiBank Nigeria Limited (N14.44 billion), Polaris Bank (N50.43 billion), Stanbic IBTC Bank (N109.26 billion), Standard Chartered Bank Limited (N45.42 billion), Sterling Bank (N57.15 billion), Titan Trust Bank (N29.20 billion), Unity Bank (N16.33 billion), and Wema Bank (N15.13 billion) will be adding a new capital of N185.56 billion, N149.57 billion, N90.74 billion, N154.58 billion, N142.85 billion, N170.80 billion, N183.67 billion, and N184.87 billion respectively
Meanwhile, under the regional non-interest banking with a new capital base of N10 billion, TAJ Bank and Lotus Bank met the requirement by N14.06 billion and N13.03 billion respectively.
Based on the stipulation of the CBN, Access Corporation, the parent company of Access Bank has paid-up capital and share premium of N251.811 billion according to its 2023 full-year result released yesterday hence a shortfall of N248.189 billion.
FBN Holdings, the parent company of FirstBank has paid-up capital and share premium of N251.3 billion, hence a shortfall of N248.66 billion, according to its Q3’23 results. The paid-up capital and share premium of GTHoldco, the parent company of GTBank stands at N138.186 billion as of Q3’23, hence a shortfall of N361.814 billion
UBA has paid-up capital and share premium of N115.815 billion, hence a shortfall of N384.185 billion according to its Q3’23 Zenith Bank has a paid-up capital and share premium of N270.745 billion, hence a shortfall of N229.255 billion. https://leadership.ng/new-cbn-capital-25-banks-need-n3-89trn-fresh-funds-to-meet-requirements/ 1 Like |
Re: New CBN Capital: 25 Banks Need N3.89trn Fresh Funds To Meet Requirements by AsabaPropertyAg(m): 10:20am On Mar 30 |
2 Likes |
Re: New CBN Capital: 25 Banks Need N3.89trn Fresh Funds To Meet Requirements by meum: 11:48am On Mar 30 |
Bank consolidation phase 2.
Phase 1 was in 2004 6 Likes |
Re: New CBN Capital: 25 Banks Need N3.89trn Fresh Funds To Meet Requirements by Zxcvbnmghtr: 11:48am On Mar 30 |
May this have a very, very, very lasting prosperous effect on our economy. May it benefit me, my family and all wishers of success. 27 Likes 1 Share |
Re: New CBN Capital: 25 Banks Need N3.89trn Fresh Funds To Meet Requirements by Opiosko: 11:49am On Mar 30 |
Are loan apps institution included? I want to buy a share in the them because they are making mad money through their insane interest rate.
But wait, what happens if someone borrows money and don't pay back, will the loan be lost just like that? 2 Likes |
Re: New CBN Capital: 25 Banks Need N3.89trn Fresh Funds To Meet Requirements by bluecircle470: 11:49am On Mar 30 |
AsabaPropertyAg: After this Recapitalization Nigeria will remains with only 5 banks. The cbn governor is too harsh on Nigerian banks, from #25 Billion to #500 Billon, 200 Billion, 100 Billion.
Nigerians are always complaining…. It’s for your own good 20 Likes |
Re: New CBN Capital: 25 Banks Need N3.89trn Fresh Funds To Meet Requirements by PlutoChief: 11:50am On Mar 30 |
Okay! Mergers uploading. 2 Likes 1 Share |
Re: New CBN Capital: 25 Banks Need N3.89trn Fresh Funds To Meet Requirements by Ecos(m): 11:50am On Mar 30 |
Wetin concern me sef If them like make them make am 2 trillion sef My own be say, make my small change wey I reserve for Easter beer no disappear. Because if I enter mama Nkechi beer parlour and I no see my small change, wetin happen last Christmas go repeat himself on Easter day oh
Na warning I drop so!!!! 11 Likes |
Re: New CBN Capital: 25 Banks Need N3.89trn Fresh Funds To Meet Requirements by inoki247: 11:50am On Mar 30 |
Ok so far he no touch all this our online Fintech Bank.... People that wan kill dem sef on using Union Bank, Wema Bank, First Bank, UBA etc and always preaching to us that the Like of Opay, Kuda, Moniepoint will run away with our money will now see they're keeping derr money with Pauper 1 Like |
Re: New CBN Capital: 25 Banks Need N3.89trn Fresh Funds To Meet Requirements by omoredia: 11:50am On Mar 30 |
Use the N90 billion u use fund hajj to Saudi arabia 4 Likes |
Re: New CBN Capital: 25 Banks Need N3.89trn Fresh Funds To Meet Requirements by MDVCONSULTANTS: 11:50am On Mar 30 |
Just fix the economy |
Re: New CBN Capital: 25 Banks Need N3.89trn Fresh Funds To Meet Requirements by Kukutente23: 11:50am On Mar 30 |
That's just like one- seventh of the national budget |
Re: New CBN Capital: 25 Banks Need N3.89trn Fresh Funds To Meet Requirements by RecentHistory: 11:50am On Mar 30 |
AsabaPropertyAg: After this Recapitalization Nigeria will remains with only 5 banks. The cbn governor is too harsh on Nigerian banks, from #25 Billion to #500 Billon, 200 Billion, 100 Billion.
You should actually keep quiet if you have nothing sensible to contribute. 6 Likes |
Re: New CBN Capital: 25 Banks Need N3.89trn Fresh Funds To Meet Requirements by slivertongue: 11:50am On Mar 30 |
most of the banks will survive it.
Very soon it will be one trillion naira. Even if the banks capitalize to one trillion naira each it won't change the fortunes of the economy if NIGERIANS consume more the produce. 7 Likes |
Re: New CBN Capital: 25 Banks Need N3.89trn Fresh Funds To Meet Requirements by Amcor: 11:51am On Mar 30 |
H.elp a dying man 003. 732. 645.3 gt. b |
Re: New CBN Capital: 25 Banks Need N3.89trn Fresh Funds To Meet Requirements by Sunnycliff(m): 11:52am On Mar 30 |
These will lead to few banks in Nigeria and the formation of banking cartel with its disadvantages 1 Like |
Re: New CBN Capital: 25 Banks Need N3.89trn Fresh Funds To Meet Requirements by Smokeybrain(m): 11:53am On Mar 30 |
Foreign direct investment will increase. 2 Likes |
Re: New CBN Capital: 25 Banks Need N3.89trn Fresh Funds To Meet Requirements by Honestey: 11:54am On Mar 30 |
Let's all the commercial banks merged together and become one |
Re: New CBN Capital: 25 Banks Need N3.89trn Fresh Funds To Meet Requirements by Sunnycliff(m): 11:54am On Mar 30 |
Zxcvbnmghtr: May this have a very, very, very and lasting prosperous effect on our economy. May it benefit me and my family and all wishers of success. Like the 90bn Hajj money benefitted u and ur family while pending 5bn student loan 8 Likes |
Re: New CBN Capital: 25 Banks Need N3.89trn Fresh Funds To Meet Requirements by Kingpele(m): 11:54am On Mar 30 |
It will be too difficult for most banks |
Re: New CBN Capital: 25 Banks Need N3.89trn Fresh Funds To Meet Requirements by PlayerMeji: 11:55am On Mar 30 |
Time to fuc.k some pretty bank ladies again! 4 Likes |
Re: New CBN Capital: 25 Banks Need N3.89trn Fresh Funds To Meet Requirements by ecolime(m): 11:55am On Mar 30 |
Hmmm Cunny way to cheaply fund our over-bloated budget without borrowing from China. Sense no go kill Cardoso and Tinubu. Just don't kill our banks 3 Likes |
Re: New CBN Capital: 25 Banks Need N3.89trn Fresh Funds To Meet Requirements by Zxcvbnmghtr: 11:55am On Mar 30 |
Sunnycliff:
Like the 90bn Hajj money benefitted u and ur family while pending 5bn student loan All of the above. 1 Like |
Re: New CBN Capital: 25 Banks Need N3.89trn Fresh Funds To Meet Requirements by Felabrity: 11:55am On Mar 30 |
Make dem sha no touch my money |
Re: New CBN Capital: 25 Banks Need N3.89trn Fresh Funds To Meet Requirements by adioolayi(m): 11:56am On Mar 30 |
By the time First Bank, Access Bank, GTB and Zenith Bank do their hardcore marketing , they should be fine 3 Likes |
Re: New CBN Capital: 25 Banks Need N3.89trn Fresh Funds To Meet Requirements by Calitoscassius(m): 11:56am On Mar 30 |
Sunnycliff:
Like the 90bn Hajj money benefitted u and ur family while pending 5bn student loan No mind dem, dem don start again with their useless may it favour me and my families delusions. 3 Likes |
Re: New CBN Capital: 25 Banks Need N3.89trn Fresh Funds To Meet Requirements by Lexusgs430: 11:57am On Mar 30 |
adioolayi: By the time First Bank, Access Bank, GTB and Zenith Bank do their hardcore marketing , they should be fine Rather than this, they should just merge....... You think if they release shares, Nigerian's would foolishly jump in again........😁 2 Likes 2 Shares |
Re: New CBN Capital: 25 Banks Need N3.89trn Fresh Funds To Meet Requirements by Calitoscassius(m): 11:57am On Mar 30 |
Zxcvbnmghtr: May this have a very, very, very and lasting prosperous effect on our economy. May it benefit me and my family and all wishers of success. Una don start again with this delusion 2 Likes |
Re: New CBN Capital: 25 Banks Need N3.89trn Fresh Funds To Meet Requirements by IamANigerianMan: 11:57am On Mar 30 |
AsabaPropertyAg: After this Recapitalization Nigeria will remains with only 5 banks. The cbn governor is too harsh on Nigerian banks, from #25 Billion to #500 Billon, 200 Billion, 100 Billion.
Nigerian bank should be able to get up to 10trillion now, most of these fraud CEO has. |
Re: New CBN Capital: 25 Banks Need N3.89trn Fresh Funds To Meet Requirements by Ecos(m): 11:59am On Mar 30 |
Zxcvbnmghtr: May this have a very, very, very and lasting prosperous effect on our economy. May it benefit me and my family and all wishers of success. Oga. Many people will loose their job Will that one favour you and your family too? You are a sadist! 1 Like |
Re: New CBN Capital: 25 Banks Need N3.89trn Fresh Funds To Meet Requirements by stunnert(m): 11:59am On Mar 30 |
This is absurd and totally wicked |
Re: New CBN Capital: 25 Banks Need N3.89trn Fresh Funds To Meet Requirements by Zxcvbnmghtr: 12:01pm On Mar 30 |
1 Like |