The Governor of the Central Bank of Nigeria, Godwin Emefiele, says there are plans to carry out a recapitalization exercise for deposit money banks in the country. Emefiele made this known today while unveiling the five-year plan of the bank. He said this is to ensure that Nigerian banks are among the top 500 in the world.
Bank recapitalization is the act of changing the capital structure of a bank to provide more equity funds to meet the bank’s long-term financing needs to ensure the security of shareholders fund. In July 2004, the CBN announced the recapitalization of the banking sector from two billion naira to twenty-five billion naira with effect from December 31, 2005. This led to the reduction in the number of banks to twenty-four to eighty-nine.
Emefiele said today that the Banks will, therefore, be required to maintain a high level of capital as well as liquid assets in order to reduce the impact of an economic crisis on the financial system.
The CBN governor also said that the apex bank will continue to defend the naira within the next five years as there are no plans to float the naira. He said this would “reduce the impact that exchange rate volatility could have on the nation’s economy.