A new report has projected that the Central Bank of Nigeria may ask commercial banks with international banking licence to raise their capital base to over N900bn.

This came a few months after the Central Bank of Nigeria Governor, Olayemi Cardoso, said the apex bank would be asking lenders to raise more capital in order to support the Federal Government’s vision to grow the economy to $1tn.

According to the Banking Sector FY 2024 Outlook produced by CardinalStone Securities, a non-bank securities trading firm, Nigeria banks may be required to boost their capital, with projections indicating an increase ranging from N181.85bn for regional banking licences to N909.27bn for international banking licenses.

The report, titled, “Nigerian banks: On the cusp of a new dawn”, based the projection on the prospects of the CBN returning to the dollar ratios of capital bases-to-GDP set in 2005.

These ratios ranged from 0.04 per cent for regional banks to 0.22 per cent for commercial banks, according to the report.

However, the report stated that the goal of reaching a $1tn economy in seven years may even necessitate higher capital base requirements.

It noted that there has been a substantial decline from 2005’s recapitalisation exercise, as the requirements which ranged from 0.04 per cent to 0.22 per cent of the GDP in dollar terms as of 2005, have dropped to a range of 0.00 per cent to 0.01 per cent of the GDP in dollar terms as of 2024.

The report read in part, “Banks may be expected to boost capital base to between N181.85bn (for regional banks) and N909.27bn (for international banks), given 2024 real GDP of $472.6bn and exchange rate of N841.61/$ as at December 20, 2023.

“In this case, the majority of banks are likely to scale this hurdle, with some tier-1 banks even boasting capital bases above 2.1x of the threshold implied by this scenario analysis and with Zenith Bank at the peak.”

It added, “However, the ambitious target of reaching an economic size of $1tn in seven years may require an even higher range for capital base requirements. Tier-1 international banks like Zenith Bank and UBA are likely to surpass the implied thresholds.

“We will continue to monitor developments in this space to see what the apex bank eventually settles for as well as the structure of the directives and timelines.”

Islie:


https://punchng.com/cbn-may-raise-banks-capital-base-to-n900bn-report/

DMerciful:
Let Amoda do more relocation to Lagos, the core North will wait for him 2027!

This would give the coalition flag bearer Peter Obi the sweeping victory in 2027 and there would be not swapping of victory like 2023!

alimiadedayo1:

know this obi can never become the president of Nigeria

Realdeals:
Could that be responsible for the sudden rise in Banks shares? People should be careful of those banks manipulations.

DMerciful:
Let Amoda do more relocation to Lagos, the core North will wait for him 2027!

This would give the coalition flag bearer Peter Obi the sweeping victory in 2027 and there would be not swapping of victory like 2023!

matify83:


Anyone buying bank shares at this moment may be gambling.

Most banks may approach the stock market to raise capital in the event of a 900B recapitalization.

After such public offerings, share prices usually settle down to market values which is the best time to buy.

Most bank shares now are overvalued and those that know will quietly divest their shares while the gullible will buy and start recording capital depreciation.

matify83:
This Long expected recapitalization would shore up their resilience to external shocks and engender depositors confidence in the banking sector.

With such huge capital base, our banks would become big players in financing huge projects instead of government always running to the Chinese Exim bank or AfDB for loans.

This may lead to bank mergers and some outright "hostile takeovers" but the industry would be better for it.

Kudos to the regulators.

matify83:


Anyone buying bank shares at this moment may be gambling.

Most banks may approach the stock market to raise capital in the event of a 900B recapitalization.
Most bank shares now are overvalued and those that know will quietly divest their shares while the gullible will buy and start recording capital depreciation.

After such public offerings, share prices usually settle down to market values which is the best time to buy.

matify83:
This Long expected recapitalization would shore up their resilience to external shocks and engender depositors confidence in the banking sector.

With such huge capital base, our banks would become big players in financing huge projects instead of government always running to the Chinese Exim bank or AfDB for loans.

This may lead to bank mergers and some outright "hostile takeovers" but the industry would be better for it.

Kudos to the regulators.

DMerciful:
You're not God!

DMerciful:
Let Amoda do more relocation to Lagos, the core North will wait for him 2027!

This would give the coalition flag bearer Peter Obi the sweeping victory in 2027 and there would be not swapping of victory like 2023!

anonymous1759:


Unrepentant wailing wailers , when PMB took everything to the North you complained , Tinubu brought it back you’re still complaining?
It’s obvious all you want is power no vision at all.
Only Death can stop Bat from completing his 8yrs unless he performs poorer than Buhari.
Northern governors will still support him to inherit his south west support in the up coming elections.