The Central Bank of Nigeria (CBN) has said that it will soon be announcing a new capital base for banks in the country as it said Nigerian banks were not well capitalised to meet the needs of the economy.
The CBN governor, Dr Olayemi Cardoso, in his first public speech at the 2023 Bankers Dinner on Friday night, said while there has been stability in the banking sector, banks in the country were not adequately capitalised to meet the need of a $1 trillion economy which the present government was aiming to achieve.
Asides this, the apex bank chief said there will be a reassessment of licenses and entities found to be operating outside the purview of their licenses will be subjected to sanctions. This is as said the CBN will be taking corrective actions to restore macroeconomic stability and address fundamental flaws.
He said; “I understand that many of you have concerns about the current state of our economy. I want to assure you that while it is indeed a formidable challenge, it is not insurmountable. With the right policy measures, we can overcome these obstacles and pave the way for progress and prosperity. I am confident and optimistic that by taking appropriate corrective actions and strategic steps, we can restore macroeconomic stability and address fundamental flaws.
“Indeed, despite the challenging global and domestic macroeconomic environment, Nigeria’s financial sector has demonstrated resilience in 2023, with key indicators of financial soundness largely meeting regulatory benchmarks. Stress tests conducted on the banking industry also indicate its strength under mild-to-moderate scenarios of sustained economic and financial stress, although there is room for further strengthening and enhancing resilience to shocks. Therefore, there is still much work to be done in fortifying the industry for future challenges, a topic that I will delve into later in my address.
“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 not just about the stability of the financial system in the present moment, as we have already established that the current assessment shows stability. However, we need to ask ourselves: Will Nigerian banks have sufficient capital relative to the financial system’s needs in servicing a $1.0 trillion economy in the near future? In my opinion, the answer is “No!” unless we take action. Therefore, we must make difficult decisions regarding capital adequacy. As a first step, we will be directing banks to increase their capital.”
Speaking at the dinner, minister of finance and coordinating minister of the economy, Wale Edun, said the President Bola Tinubu-led government would continue on its course of reforms, a path which he said would soon begin to yield results.
The minister noted that the reforms embarked on had been bold and courageous, and the government is sure that it is on the right course and would stay on it to ensure that the economy thrives.
He added that although the reforms seem to have made things difficult, it is important to stay the course and because the results are beginning to show and he won’t say anything more.
“In the next few days, I can assure you will continue to hear some of the progress that is meant to turn around the economy and to encourage investors, to grow the economy, creating jobs and reducing poverty,” he said.
