Senate Solicits CIBN Support for Planned Banks’ Recapitalisation

Sunday Aborisade in Abuja

The Senate, through its Committee on Banking, Insurance and Other Financial Institutions has solicited the support of the Chartered Institute of Bankers of Nigeria (CIBN) to the ongoing move to recapitalise banks in the country after a similar exercise took place in 2005.

The Central Bank of Nigeria (CBN) on July 6th 2004, announced the recapitalisation of banking sector from N2 billion to N25 billion with effect from December 31, 2005.

The initiation of increasing the banks minimum capital base to N25 billion in 2006 led to a remarkable reduction in number of banks from 89 to 24.

Governor of CBN, Olayemi Cardoso had also in November last year announced that the apex bank would be asking the deposit money banks in Nigeria to increase their capital base in order to service the $1 trillion economy projected by President Bola Tinubu.

The Chairman of the Senate Panel, Tokunbo Abiru, who played host to the CIBN executive in his office yesterday, also commended the CBN’s to recapitalise for the banks.

Abiru explained that with an increased capital base, the banks will be able to finance large-ticket projects, and invest in information technology with a view to modernising their operations.

He said the DMBs would  also be positioned to compete, effectively in the global scene.

He said the visit of the CIBN leadership to the Senate was timely as the red chamber will soon start the amendment to the various laws that had been outdated.

He said the laws that established the CIBN are old and that the Senate would look at them with a view to amending them.

He said: “We acknowledge the CIBN roles. Despite the global financial challenges, the Nigeria’s banking sector is very resilient. Kudos to the institute, the regulator and the National Assembly through its oversight.”

He urged the leadership of the institute to critically examine the ongoing development in the financial sector especially regarding inflation caused by the rising rate of naira to the international currencies.

Abiru said: “There are serious complaints around bank services. Customers are complaining about so many charges and we want you to look into that.

“We shall ensure that the banking industry is properly regulated by enacting laws that would engender confidence in the sector.  We are all witnesses to what happened in the last leadership of the regulator. We must join hands to rebuild that confidence.

“We hope to partner with relevant professional bodies to ensure efficiency. We are operating around high inflationary environment and we have challenges around this. The CIBN should be mindful of this and guide the operators.

“One of the challenges we see today is that the rate at which the exchange rate moved between January and February from about N900/$ to about N1,600/$, has a very strong implication.”

He explained, that for instance, those who borrowed when dollar was about N900 now have over N600 exposure, which has serious implications for repayment and the financial system.

“I implore you, especially the CEOs to deploy strong risk management control measures to it so that you can go back to your balance sheet and prepare for any eventuality,” he stated.

He also commended the CIBN for its human capital development skills programme.

The CIBN executive, led by its President/ Chairman of Council, Dr. Ken Opara said the institute was in Senate to solicit the  support of the upper chamber regarding their proposed amendment to the CIBN Act.

He said the amendment became imperative in the light of current realities in banking and finance landscape vis-a-vis the emerging innovations in the sector.

Opara also  commended the panel on the proactive steps it took to comprehensively review the extant laws within the financial services sector, aimed at fostering economic sustainability and growth.

The CIBN president said if the CIBN Act was amended, everyone working in the banking sector would be held accountable for misconduct or financial crimes.

He said: “In the current amendment, we want to capture everyone working in the banking industry in Nigeria for the purpose of upholding ethics and professionalism CBN, NDIC, and banks are to send reports of allegations of misconduct to the Institute.”

He said part of the amendment was the expansion of the institute’s name to include ‘finance” to conform to the institute’s coverage and best practice