CPPE: Banks' recapitalisation is to ensure safety of depositors’ funds

The Centre for the Promotion of Private Enterprise says banks’ recapitalisation would ensure the safety of depositors’ funds.The capital base for commercial banks with international licences was adjusted to N500 billion, while the minimum capital requirements for national and regional licence holders were pegged at N200 billion and N50 billion, respectively.

“The real issue is that inflation had weakened the value of money overtime which makes recapitalization imperative and inevitable,” he said. “But since then, the value of the minimum capital has been significantly eroded by inflation. For instance, the official exchange rate in 2005 was about N130 to the dollar. This meant that the N25bn for a national bank, for instance, was equivalent to $192m,” he said.“However, this does not diminish the need for regulatory authority to ensure that this soundness and stability is preserved and improved upon, especially because of the recent macroeconomic headwinds.

“This is necessary to allow for inclusion and reduce the risk of dominance of the banking space by a few big banks.”

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