Governor of the Central Bank of Nigeria, Olayemi Cardoso, has restated that the fresh round of banking consolidation in the country is aimed at strengthening the financial system, making it robust to meet the expected headwinds and, ultimately, grow the economy.
He said this on Saturday in Lagos while speaking as the principal guest of honour at the launch of a book, ‘The Power of One Man: How the Soludo-engineered Consolidation Transformed Nigerian Banks to Global Players.’
Written by Ray Echebiri, a seasoned journalist and economist, the book, which was launched at the Eko Hotels and Suites, Victoria Island, Lagos, captures the chain of events in the Nigerian economy and the banking industry in particular, that led to the banking consolidation of 2004/2005, and what transpired during and immediately after the exercise.
Mr Cardoso, represented by the CBN’s Deputy Governor, Financial System Stability Directorate, Philip Ikeazor, stressed that it was important that banks be recapitalised to the level where they will be able to absorb shocks that might be occasioned by the current administration’s economic reforms and policies.
“Remember that when the current administration came into place, there was unification of FX rates, and there was the removal of fuel subsidies. And the impact on the economy, especially the manufacturing sector, is beginning to manifest and will continue over the next few years,” he noted.
Reflecting on the banking consolidation exercise done under Chukwuma Soludo while he was the CBN governor, which formed the essence of the book being launched, Mr Cardoso said the Soludo-engineered consolidation was necessary at the time because he also wanted to make the banks robust, resilient, and fit for purpose to grow the economy.
“That is exactly the same reason why we are embarking on a similar journey today. Again, I think by coincidence, if you check the quantum of the capital minimum capital levels that we require, it’s pretty similar.
“International banks are moving from N50 billion to N500 billion capitalisation, which is ten times, similar to Soludo’s 12 and a half times. National banks are moving from N25 billion to N200 billion capitalisation, roughly about eight times more.
“Why would you think…
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