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Economists Warn Nigeria’s Apex Bank Chief to Avoid Pitfalls of 2005 Recapitalisation

Economists Warn Nigeria’s Apex Bank Chief to Avoid Pitfalls of 2005 Recapitalisation

Ahead of the planned introduction of a new capital base for deposit money banks in Nigeria, the Central Bank of Nigeria (CBN) has been warned by an economists to take cautioned and making some mistakes made during the last recapitalisation of commercial banks in the country.

The Founder of Centre for Promotion of Private Enterprise, Muda Yusuf; and Prof Segun Ajibola of Babcock University, Ogun State, both spoke on Channels Television’s Sunrise Daily programme on Monday.

The economists agreed that recapitalisation of banks has become inevitable but it must be done in such a way that the mergers and acquisitions that would hit banks won’t lead to massive job cuts.


COMBO: Photo of Muda Yusuf (L) and Segun Ajibola (R).

“What we had in 2005 was very unfortunate. Banks should not be stampeded,” Yusuf said, urging the CBN to give banks enough time for systemic migration.

On his part, Ajibola called for strategic consultations between stakeholders for the process to be fluid and successful, saying that the CBN should not force banks into unholy alliances.

Last Friday, CBN chief, Yemi Cardoso said Nigerian banks do not have sufficient capital relative to the finance system needs in servicing a $1 trillion economy.

“As a first step, the Central Bank will be directing banks to increase their capital,” he announced at the 60th anniversary of the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos State.

The last time the CBN increased capital base for banks was in 2005 when current Anambra State Governor, Charles Soludo, was the apex bank chief. Capital base was raised from N2bn to N25bn, with more than 80 banks collapsing into about 30 in an unprecedented season of mergers and acquisitions that came with attendant job losses.

ChannelsTv news


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