An expert and Professor of Capital Markets, Uche Uwaleke, says commercial bank recapitalisation is likely to rejuvenate the stock market.
Uwaleke, in an interview with the News Agency of Nigeria, described the idea of the Central Bank of Nigeria as a welcome development.
He said that capital was needed to finance big-ticket projects, especially as the government was targeting a $1trn economy in a few years.
The last time CBN forced banks to recapitalise was in 2004, when Charles Soludo, former CBN governor, raised their capital base from N2 billion to N25 billion.
Uwaleke suggests the use of differential cash reserve requirements as well as preferential participation in the forex market for well-capitalised banks as some of the incentives.
“It should be more about incentives than coercion. Some Deposit Money Banks are already making efforts to increase their capital base. The CBN can use prudential guidelines to strengthen the present tiered arrangements.
The use of the CAR (the ratio of a Bank’s capital to risk-weighted assets) is a good example. For whatever it is worth, smaller banks playing at the regional level should not be regulated out of existence,’’ Uwaleke said.
Earlier, the Chartered Institute of Bankers of Nigeria led by its President, Dr Ken Opara, had said that banks were ready for recapitalisation.
NAN
