Nigerian banks set for recapitalization – CIBN

Following the recent announcement by the Central Bank of Nigeria (CBN) last weekend regarding a forthcoming round of regulator-induced recapitalization for banks, the Chartered Institute of Bankers of Nigeria (CIBN) has affirmed that banks are prepared to adhere to any new capital requirements that may be mandated.

The President of the CIBN, Mr. Ken Opara, conveyed this message during the National Seminar on Banking and Allied Matters for Judges in Abuja yesterday. He indicated that banks were currently exploring diverse strategies, such as issuing bonds and equity.

His words, “You will also see that banks have raised bonds as much as possible and have repaid those bonds when they mature, it’s not a difficult thing.”

“I think the major thing is that the industry is deep, they have deep pockets, they have the financial strength. The stock exchange where they are going to go to raise money is also quite deep. The Nigerian stock market, for instance, is the second biggest in Africa, and that tells you clearly that it is a deep market. Also speaking further, Opara criticized the magistrate courts over frequent orders to freeze bank accounts.”

According to him, the orders were often issued without proper investigation adding that such orders should come from the High Courts.

He also condemned what he described as the harassment of bank officials by the Economic and Financial Crimes Commission (EFCC), saying they EFCC officials always storm banks demanding that they place ‘Post No Debits’ (PNDs) on customers’ accounts without court orders. He stated: “This is a violation of the legal provisions on confidentiality of bank accounts. When banks demand an order of court, EFCC officials harass and intimidate bank officials and, in some cases, arrest them. Banks are calling for EFCC to be held accountable for their reckless actions, in order to curb the abuse of power.”

“Judgment creditors are often proceeding against banks as garnishees, without first verifying the indebtedness of the bank to the judgment debtor.  ”

“This practice imposes unreasonable costs on banks, who are forced to pay legal fees even if they do not have the judgment debtor’s funded account.”

“In some cases, banks do not receive a summons from the court for the hearing, and the court may proceed to issue a garnishee absolute judgment on the bank”.