A Review of the Nigerian Energy Industry

CBN gives deadline to banks to beef up capital base

Central Bank of Nigeria.
Central Bank of Nigeria.

13 May 2015, Lagos – In line with the increased capital requirements under Basel II Capital Accord, the Central Bank of Nigeria (CBN), has given at least six banks in the country deadline to ramp up their capital base.

According to reliable industry sources, many banks have not met the Basel II capital requirement and will need to raise additional capital to beef up their capital base within the next 12 months.

To this end, the sources explained that the CBN has directed the wanting banks to submit a recapitalisation plan, outlining the timeline for their capital raising plan, to the apex bank by June 2015.

As it was gathered, the banks are expected to implement the recapitalisation plan and complete their recapitalisation plan by the end of June 2016.

A leading global investment and finance firm stated last weekend that 10 banks have been confirmed to have met the capital requirements under the Basel II and the banks include: Access Bank, Diamond Bank, FBN Holdings, FCMB Group.

Others are Fidelity Bank, Guaranty Trust Bank (GTB), United Bank for Africa (UBA), Zenith Bank, Wema Bank and Skye Bank Plc.

While the capital adequacy ratio of most banks is generally above the minimum regulatory threshold of 15 per cent, the adoption of Basel II implies additional capital as banks grow their risk assets.

The Basel II is the second global standards of capital adequacy issued by the Basel Committee on Banking Supervision under the auspices of the Basel, Switzerland-based Bank for International Settlements (BIS), the oldest international financial organisation that coordinates central banks and standards for the international financial markets.

The Basel Committee has issued three sets of the global standards including Basel I, Basel II and Basel III, which increased and stricter capital risks and exposure management requirements from one level to another.
*Akinwunmi King – Daily Independent

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