Caption: From left, Group Chief Executive, Cowry Asset Management Limited, Johnson Chukwu; Group Chairman, NGX Group Plc, Alhaji, Dr. Umar Kwairanga; Chairman, Capital Market Correspondents Association of Nigeria (CAMCAN), Mrs. Chinyere Joel-Nwokeoma; and Divisional Head, (Legal and Enforcement), John Achile, who represented the Director-General of the Securities and Exchange Commission (SEC), Dr. Emomotimi Agama, at the CAMCAN 2024 annual workshop held on Saturday in Lagos.
Amid growing worries among stakeholders over the continued delay in the release of banks’ recapitalisation proceeds outcome, chartered Accountant, tax expert and chief executive of Cowry Assets Management Limited (a member of the Nigerian Exchange Limited), at the weekend in Lagos wondered why the Central Bank of Nigeria (CBN) is yet to publish the outcome of its verification of banks’ recapitalisation, five years after some of them completed the exercises.
He, therefore, urged the apex bank to deploy available Infrastructure technology and Bank Verification Numbers (BVN) to accept or reject any of the offers proceeds and enable investors get their allotment.
This, he said, will also ensure that owners of funds rejected deploy them in other profitable economic activities, thereby ensuring speedy conclusion of the process to that the banks can also proceed to do what was outlined in their offer documents without further delay.
Chukwu, who spoke as guest speaker at the 2024 yearly workshop of the Capital Market Correspondents Association of Nigeria (CAMAN) with the theme: ‘Banks’ Recapitalisation: Bridging the Gap Between Investors and Issuers in the Nigerian Capital Market,’ argued that while the apex bank’s role in verifying the source of the capital invested is important, the continued dragging of the verification exercise is dampening investor confidence.
According to him, this is particularly worrisome for investors whose funds may be returned where the offers may be oversubscribed given the missed investment opportunities.
Chukwu also stated that the current CBN requirements for investors investing in banks shares are seen by many as overly stringent and creating barriers for both issuers and investors.
He cited the provision for three-year audited financial statements of a would-be corporate investors, in addition to board resolution authorising the investment and tax clearance certificates for the preceding three years, noting that these requirements serve as disincentives to investment in the capital market.
He added that while regulation is necessary for maintaining the stability and integrity of the financial system and ensuring that unqualified capital is not invested in the banks, there is need to leverage on existing customer information in the banking system to avoid imposing onerous conditions on investors.
The guest speaker described banks’ recapitalisation as a key strategy for strengthening the Nigerian banking sector and fostering economic growth, arguing however that the success of these efforts hinges on effectively bridging the gap between investors and issuers in the capital market.
Outlining the role of the capital market in the recapitalisation exercise, Chukwu noted that when banks access the capital market and demonstrate their ability to raise capital through successful IPOs, rights issues and bonds, it strengthens investors confidence and sends a positive signal to the broader financial market.
This, he said, is because a well-capitalised bank is perceived as financially stable, reducing risk for investors and enhancing market confidence, adding that this encourages further investment in the banking sector, which is essential for the sustainable growth of the industry.
He, however, called for concerted efforts from both banks and investors, supported by regulators in ensuring that the Nigerian banking sector remains resilient, competitive, and capable of driving the country’s economic growth for the future.
Chukwu also urged the CBN and other regulatory bodies to work together in creating a more predictable regulatory environment for banks and investors.
“The frequency of regulatory policy changes need to be moderated to allow for better planning for both banks and the investing public as well as reduce the regulatory and operational risks associated with these frequent changes.
“Banks must commit to improving their transparency and disclosure standards. This includes the publication of detailed and accurate financial statements, risk disclosures, and forward-looking guidance.
“By addressing the challenges of information asymmetry, regulatory uncertainty, and liquidity, while improving transparency, corporate governance, and financial innovation, the Nigerian capital market can unlock new opportunities for bank recapitalisation,” he said.
