CBN Says Nigerian Banks Already Submitting Recapitalisation Plans

Forty-eight hours after the Monday morning revocation of the operating licence of Heritage Bank Plc, the Central Bank of Nigeria (CBN), assured that the nation’s “financial system remains safe, sound, and resilient.”

The apex bank in a statement by Mrs. Hakama Sidi-Alli, its acting Director, Corporate Communications, noted that the various banks “have begun

submitting implementation plans for the Banking Sector Recapitalisation Programme in compliance with the CBN Circular reviewing the minimum capital requirements for Commercial, Merchant, and Non-Interest Banks (CMNIBs).”

Justifying the recapitalisation of Nigerian banks, the statement said it will also enhance their “buffers to withstand economic shocks, this proactive measure by the CBN to require CMNIBs to recapitalize will result in increased capital for Nigeria’s banks, enabling them to provide much-needed credit to critical sectors of the economy.”

This, it stressed, “will increase the financial system’s contribution to the growth and development of a $1tr Nigerian economy, even as it reassured all stakeholders of its unwavering commitment to ensuring the financial system’s stability.

“Our financial system remains on a solid footing, and the CBN will continue to take all necessary steps to maintain its safety and soundness, Mrs. Sidi Ali added.

These plans, she continued while reacting to rumours suggesting further plans to revoke the licenses of three additional banks, are currently being  reviewed by the CBN. Sidi-Alli described the allegations as false, noting that it is intended to trigger panic in the financial system.

Recall that in the statement announcing the liquidation of Heritage bank on Monday, the apex bank specifically accused it of breaching Section 12 (1) of the Banks and Other Financial Institutions Act (BOFIA), 2020, with its Board and Management unable to improve the “bank’s financial performance, a situation which constitutes a threat to financial stability.

The CBN also said it had over time engaged Heritage Bank on the matter,

prescribing various supervisory steps intended to stem the decline, noting with regret that the bank continued to suffer with no reasonable prospects of recovery, thereby making the revocation of its license the next necessary step.