Akinwunmi also disclosed that banks would undergo “stress tests” from time to time to ensure they are on a solid and sound financial footing without waiting for a long-term recapitalisation
Nothing will happen to the funds of depositors with Union, Keystone, and Polaris banks despite the three banks inability to meet the March 31st deadline for their recapitalisation, the Central Bank of Nigeria (CBN) has assured.
The apex bank advised customers of the bank not to worry or panic about the safety of their funds or take irrational decisions, stressing that depositors’ funds are safe and secure from any fallout or consequences of the bank’s failure to meet the recapitalisation requirements. They can withdraw their money at any time they want.
The Director of Banking Supervision at the CBN, Olubukola Akinwunmi, gave the assurance on Friday when he featured on Arise Television Business Morning Programmes.
Akinwunmi cited the going judicial and regulatory procedures by the banks for their inability to meet the deadline, adding that banks have different pathways to meet the minimum capital base required for their category of banking by the CBN.
“It’s important we tell Nigerians that these banks have the capacity to raise the required capital, and they’re in the process of raising the required capital, the likes of Union, Keystone and Polaris banks. However, there are judicial and regulatory processes to be addressed before that can be concluded,” he said.
He noted that the apex bank is watching these banks closely until the judicial processes are satisfactorily concluded after which they will return to the “recapitalisation based on the minimum capital requirements stipulated by the apex bank once the processes are sorted.”
Akinwunmi also disclosed that banks would undergo “stress tests” from time to time to ensure they are on a solid and sound financial footing without waiting for a long-term recapitalisation.
He stated that it was imperative for the banks to undergo occasional stress tests as it would help ascertain their risk exposure to businesses and the handling of depositors’ funds.
“We don’t have to wait for another 20 years for another recapitalisation to happen. The stress test framework requires the banks to adequately manage a scenario that could happen when there’s a shock that exposes them to higher risks.
“On an ongoing basis, banks should assess their risk exposure based on a gradual deterioration of their loan books, which is a scenario-based deterioration and the bank’s capacity to raise the required capital while managing their risk exposure,” he explained.
The focus, he said, was for banks to proactively manage their capital adequacy and, where necessary, raise fresh capital required to maintain a capital base without unexpected risk exposure.
“What that does is to ensure that… the banks can maintain a banking system that is stable, resilient and sound for business,” he added.
Recall that the apex bank has concluded the recapitalisation drive of Nigeria’s banking sector, an effort aimed at strengthening the resilience of the financial system and enhancing its capacity to support the economy.
The CBN introduced a revised recapitalisation policy in March 2024, giving banks a 24-month window, from 1 April 2024 to 31 March 2026, to strengthen their capital base. The policy requires Nigerian banks to strengthen their capital base, with thresholds of N500 billion (international), N200 billion (national), and N50 billion (regional).
Affirming the conclusion of the exercise on Wednesday, April 1, the CBN stated that 33 banks had met the new minimum capital requirement, while raising a total of N4.65 trillion in fresh capital over 24 months.
