CPPE speaks on CBN recapitalisation of banks

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“It measures the financial soundness of a bank, ensures the safety of depositors’ funds, deepens financial intermediation, and enhances the capacity to support economic growth through the funding of investments,” he said.The apex bank said the capital base of banks with international authorisation had been increased to N500 billion while that of national banks was increased to N200 billion.

“That was under President Olusegun Obasanjo, with Charles Soludo as CBN governor. But since then, the value of the minimum capital has been significantly eroded by inflation,” he said.“This meant that the N25 billion for a national bank, for instance, was equivalent to $192 million. The naira equivalent today is about N250 billion. For the International Banking license, it would be about $384 million, an equivalent of about N500 billion.

“The proposed recapitalization of banks should be done in a manner that would minimize shocks and disruptions to the banking system and the economy at large. The think tank said it is important to sustain the confidence of the banking public about the soundness and stability of the Nigerian banking system, especially because of the perception and vulnerable risks of smaller banks.

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