Emomotimi Agama, the director general of the Securities and Exchange Commission, has reiterated the importance of the current bank recapitalization initiatives in assisting the country in reaching its 2030 target of a $1 trillion economy.
Agama, who recently addressed a session in Abuja about bank recapitalization, emphasized the necessity of enacting broad economic reforms in addition to supporting the banking industry, according to a statement released by the Commission. He made the important point that stronger banks would be essential to advancing these goals.
While acknowledging the challenges posed by recapitalisation such as share price dilution and heightened debt servicing, Agama asserted that the advantages, including increased investor confidence and improved risk management, far surpass these potential downsides.
According to him, “Nigeria must diversify its economy beyond oil exports and invest in key areas, such as infrastructure, human capital, and innovation. Enhancing the business environment, reducing regulatory hurdles, and promoting financial inclusion are essential to driving sustainable growth.
“Recapitalisation through the capital market can help banks meet regulatory capital requirements, improve capital adequacy ratios, and increase lending capacity. This, in turn, will enhance financial stability and restore investor confidence,”
“Such lending will drive economic growth by supporting big projects and industries, attracting foreign investors, and boosting capital inflows,” he said.
He pointed out that this initiative would enhance the capital market and promote the listing of banks and other companies on the Nigerian Exchange Limited.
Recently, SEC introduced a framework aimed at ensuring a transparent and efficient capital-raising process for banks and holding companies involved in the recapitalization program.
This framework provides guidelines for raising capital through rights issuances, private placements, and other approved methods during the recapitalization period from 2024 to 2026.
In March, the Central Bank of Nigeria directed deposit money banks to strengthen their capital base.
According to the CBN’s recapitalisation circular, commercial banks with international authorization are required to raise their capital base to N500 billion, while national banks must reach N200 billion. Additionally, banks with regional authorization are expected to establish a minimum capital threshold of N50 billion.
