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Bank Recapitalization Expected to Benefit Capital Market, Says ASHON Chair

By Oluchukwu Ikemefuna

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Bank Recapitalisation ASHON: The Chairman of ASHON, Association of Securities Dealing Houses of Nigeria, Mr. Sam Onukwue stated that the new development in capital requirements of banks will stimulate activities in the primary segment of the Nigerian capital market. 

Bank Recapitalisation ASHON Chair Capital Market Boost

The primary segment has been inactive due to the lack of issues over the years. This will change with the ongoing recapitalization. 

Bank Recapitalisation

In addition, the ongoing bank recapitalization will improve the ability of Nigerian banks to take on dominant roles in Africa’s financial markets.

Also, it will encourage the industry to compete for large-ticket transactions globally.

On March 28, 2024, the Central Bank of Nigeria (CBN), announced a new capital base on the basis of a bank’s authorization. The base ranges from N200 billion to N500 billion and this is expected to commence in the next two years.

The apex bank allotted the bank lenders two years to rack up their capital. This is aimed at positioning Nigerian banks for global competitiveness. 

Consequently, this aligns the banks with the demands of the African Continental Free Trade Area.

Recapitalisation To Strengthen Nigeria Banks To Compete In The Global Market

Onukwue praised the CBN’s significant move. He noted that the increasing risks faced by banks, which were heightened by macroeconomic challenges, require a stronger capital base.

Additionally, this would ensure banks absorb unforeseen losses. However, it also prepares them to support Nigeria’s envisioned $1tn economy in the next seven to eight years.

Also Read: Nigerian Giant Banks in a Rush to Raise Funds Before CBN’s Recapitalization Deadline.

Onukwue said, “I believe that the Central Bank of Nigeria has done the right thing if our banks should compete in the global market, including the African Continental Free Trade Area.” 

“With the current inflation rate and exchange rate, it has become almost impossible for our banks to operate in line with the new global minimum capital threshold.”

He finally said, “However, In the light of the foregoing, I have no doubt that the apex bank is fair enough to base the new share capital on the level of authorization of each bank. The next thing is for every bank to justify why it should continue to operate in the banking sector.”

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Abdullahi Kafayat
Abdullahi Kafayat

Abdullahi Kafayat is an enthusiastic writer interested in the tech world. She's a graduate of Obafemi Awolowo University and has a BSc in Chemistry. You can reach her at Kafayatabdullahi17@gmail.com.

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