PUNCH
As the Central Bank of Nigeria’s proposal to initiate a new banking sector consolidation raises concerns among some industry operators, findings by The PUNCH indicate that major banks with foreign subsidiaries currently control N9.6 trillion capital base.
This is just data compiled by the papers showing that five key banks currently have capital above N1 trillion each.
An analysis of the current capital base data of leading commercial banks in Nigeria revealed that the proposed consolidation, which is yet to be fully conceptualized by the apex bank, will most likely affect national, regional and merchant banks.
A number of the national, regional and merchant banks have not grown their capital base over the years in the manner their counterparts with foreign subsidiaries have grown theirs.
The CBN Governor, Olayemi Cardoso, had on Friday in his keynote address at the Bankers’ Dinner said the apex bank would be asking banks to raise their capital base.
He premised the need to increase the bank’s capital base on servicing the $1tn economy projected by President Bola Tinubu as well as the effect of currency devaluation on bank operations.
He said, “In my recent speech at the 370th Bankers’ Committee meeting, I highlighted the economic agenda of President Bola Ahmed Tinubu’s administration. The administration, as outlined in the widely circulated Policy Advisory Council report on the national economy earlier this year, has set an ambitious goal of achieving a Gross Domestic Product (GDP) of $1tn over the next seven years, with clearly defined priority areas and strategies. Attaining this substantial target necessitates sustainable and inclusive economic growth at a significantly higher pace than current levels. The administration has already commenced this journey through fiscal reforms, including the removal of petrol subsidies and the unification of the foreign exchange market rate.
“Considering the policy imperatives and the projected economic growth, it is crucial for us to evaluate the adequacy of our banking industry to serve the envisioned larger economy. It is crucial to evaluate the adequacy of our banking industry to serve the envisioned larger economy. It is not just about its current stability. We need to ask ourselves, can Nigerian banks have sufficient capital relative to the finance system needs in servicing a $1tn economy shortly, in my opinion, the answer is no, unless we take action. As a first test, the central bank will be directing banks to increase their capital.”
However, findings by The PUNCH indicate that seven tier-1 banks seem ready for the imminent recapitalisation exercise.
Findings by The PUNCH showed that the seven leading banks in the Nigerian banking sector pooled N9.6 trillion as the capital base as of the end of the 2022 financial year.
Zenith Bank, according to information obtained from Statista, emerged as the most capitalised bank in Africa’s largest economy with N2.07tn while Access Bank came next with N1.92tn.
FBN Holdings stands strong with N1.78tn with GTCO on the fourth position with N1.37tn, followed closely by United Bank for Africa Plc at N1.35tn.
Two other banks that have surpassed the current capital base requirement of the CBN are FCMB and Fidelity Bank with N494bn and N479bn respectively.
Meanwhile, 22 other banks plying their trade in the country, according to sources who spoke with The PUNCH, are to begin seeking new investors which will help them remain in business after the CBN had disclosed the fresh capital base.
