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Bank Recapitalisation puts M & A Under Scrutiny (4)

According to the Governor of the Central Bank of Nigeria, (CBN), Olayemi Cardoso, at the post Monetary policy Committee (MPC) meeting media briefing held last week, the banking sector remains stable despite the current challenges in the economy.

His word, “The Committee noted with satisfaction that the banking system remains safe,

sound, and stable, despite the headwinds confronting the economy. It(MPC)

commended the recent recapitalization initiative and urged the management to

sustain its regulatory oversight to ensure the continued stability of the banking system.”

But many Nigerians may not take the assertion wholeheartedly considering the skeyed financial intermediation in favour of high net worth individuals as well.as multinational and local corporarioms considered to be less risky at the expense of small.and.medium scale entrepreneurs considered as engine of growth in the.economy.

The questions on the lips of most analysts are, to what extent are the lenders sound, fully capitalists at least to the level of last minimum capitalisation?

Other probing questions include, why some lenders are being superintendent by the regulators and some were on the verge of being acquired or merged with other lenders before now and whether due deligence has been carried out on some of the affected banks.

Other intriguing posers include the real identities of some of the investors in the banks during the.last exercise and confirmation of actual payments into the coffers of the federal government, through the CBN or otherwise.

Similarly, analysts have called for high powered investigations into the role played by the Assets Management Corporation of Nigeria (AMCON), under the immediate past administration alongside the last administration of CBN with a view to ascertaining both the pre and.post sales or acquisition of these banks and even their connection.or.otherwise with the ‘investors’ in these institutions.

With these and many posers, some analysts are asking whether there will not be.regulatory forbearance, without which some of the banks may remain.below zero level in terms of capitalisation.

According to Boniface Okezie, national coordinator of Progressive Shareholders Association of Nigeria, meeting the requirement by the banks should be.in traunches to avoid undue pressures on some of them.

According to Okezie, most of the banks were planning for recapitalisation at their own pace before the regulatory induced one, adding, ‘the banking sector is over regulated.

The challenges before some of the banks, particularly the middle tier lenders is the fact that besides struggling to meet the requirements by all means, the issue of packaging and rebranding to make them attractive to prospective investors might be a herculean task.

This is because,in some cases, the shareholders may not have considerable influence under the superintendency arrangement in the race to meeting the new capital requirement.

ALSO READ:Bank Recapitalisation puts  M & A Under Scrutiny (3)

Consequently , as CBN begins to match their implementation strategies submitted with their actions, analysts are waiting with bated breadth how these banks will scale through without overt or covert assistance from the CBN.

The arguments of some of the analysts are that since the likely forebearance.would come from tax payers contributions, then the public has the right to know how and.when as well as .rhe.repayment schedules after acquisition or mergers as the case may be.

Therefore the different way that both CBN and government will handle the recapitalisation exercise from the last one of 2004/2005, by meeting and satisfying all the regional interests and.agitatioms will go along way in further engendering confidence in the.sector and.the.ecomomy in general.

One sure bet now is that government would want to live by its declaration that the industry is stable as well as the need to balance all the regional interests if only to.assure their people that they are still relevant in rhe.power equation and.calculations while also ensuring the continuation of some legacies or names, considered as memorials that must be preserved by ensuring that some banks must survive, says an analyst.

MetroBusinessNews/a strategic cross-reporting initiative.

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