In 2004, the Central Bank of Nigeria (CBN) forced banks to recapitalise, raising their capital base from N2 billion to N25 billion. That year, the exchange rate was around N135/$. With that, you have about $185 million capital base requirements.
The CBN has updated that number today, from N25b to N500 billion for the largest banks. At N1,300/$, you have $385 million. So, we have an effective 2x bump ($385m/$185m) from 2004 to 2024! (During that period, the GDP has increased 3X from $135b to about $420 billion now).
The Central Bank of Nigeria (CBN) has embarked on a comprehensive financial reform aimed at bolstering the stability and resilience of the nation’s banking sector.
This reform, unveiled on Thursday, March 28, 2024, by the CBN’s Acting Director of Corporate Communications, Mrs. Hakama Sidi Ali, introduces substantial increases in the minimum capital requirements for different categories of banks, tailored to the scope of their operations.
Under the latest policy directive, commercial banks holding international authorization are mandated to fortify their capital base to an impressive N500 billion. This significant augmentation underscores the CBN’s commitment to fortifying the financial robustness of banks operating on a global scale, ensuring they can weather economic uncertainties and mitigate risks effectively.
Ask me if this will make banks give loans to traders and businesses in Oriendu Market in Ovim? No really. But it could be necessary under the present circumstances. The big banks will be fine; if they decide NOT to pay dividends for 2023, their profits alone can meet whatever the apex bank wants. My concern is the small banks which may disappear. Yes, in the year Access Bank’s parent firm recorded N612 billion profit, Unity Bank was painted red in massive losses [CBN does not allow the use of profits for meeting this specific requirement].
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Yes, you can call that banking inequality; it is big in Nigeria as the gaps are so much that we have the strong or dying banks, with thin middle. Just hope the CBN does not hasten this trajectory as jobs could be lost. Yet, the apex bank has got to do what it has to do, with Naira yoyo’ing the USD dollars. So, show up or exit the scene, banks!
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