…Tasks Banks’ Boards, Mgt On Corporate Governance, Risk Control
The Central Bank of Nigeria (CBN) has described the successful recapitalization programme of the nation’s banking sector as a catalytic policy measure with great potential for the actualization of the Federal Government’s $1 trillion economy target by year 2030 given the funding implications for the broad spectrum of the economy.
The apex bank’s Deputy Governor, Corporate Services, Dr Muhammad Abdullahi, who made this remark on Tuesday during his keynote address at the 38th Seminar for Finance Correspondents and Business Editors in Abuja, maintained that a stronger capital base for the lenders would enable them to fund long-term infrastructure, industrial expansion and merchandize trade as well as strengthen their resilience in the face global economic shocks and also invest in innovation and digital transformation.
The seasoned banker, who spoke on the theme “Towards a Robust and Resilient Financial System in the Post-Banking Sector Recapitalisation Era”, confirmed that 33 banks had met the revised minimum capital requirements and cumulatively raised N4.65 trillion at the end of the recapitalisation programme, which kicked off in March 2024.
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Noting that stronger capital base alone will not guarantee a resilient banking system, Abdullahi maintained that sound corporate governance, effective risk management and responsible lending needed to complement adequate recapitalization in order to achieve sustainable growth of the economy.
Similarly, he hinted about the need for the banks to focus on protection and usage of the raised funds for development, adding that capital is just a starting point and that the boards and management must maintain sound controls, recognise risks early and lend on the strength of viable projects.
He said bank boards and managers must act with honesty, openness and accountability, and must avoid taking reckless risks, stressing that the lenders decisions must protect depositors, investors and other stakeholders. He also said banks must guard customers’ data, keep payment services running smoothly, and recover quickly when their systems break down.
According to him, risk management can no longer stop at the danger of borrowers failing to repay, hence the banks must also prepare for market shocks, cash shortages, operational failures, cyber threats, reliance on outside service providers and risks linked to climate change.
He expatiated: “As more financial services move to digital channels, banks must invest continuously in cybersecurity, data protection, disaster recovery and business continuity,” he said. He added that customers must be able to make transactions safely and reach their money even when a bank faces technical problems.
Reflecting further on the monetary policy measures of the apex bank under the Olayemi Cardoso-led management over the past three years, the Deputy Governor explained that the CBN had achieved so much as regarding the volatility of the foreign exchange (FX) market by closing the huge FX gap between the parallel market and the official market, with the attendant implications for the stability of the market and improved exchange rate for the Naira and foreign currencies, particularly the US dollar (USD) since the monetary reforms commenced in 2023.
According to him, between then and now, the average gap between official and parallel-market exchange rates had narrowed from 68.2 per cent between January and May 2023 to less than two per cent currently.
Earlier in his welcome address, the apex bank’s Director of Corporate Communications and Investor Relations, Michael Chukwuemeka, described the seminar as an important platform for engagement between the CBN and financial journalists.
He pointed out that the focus had shifted from whether banks could successfully raise fresh capital to how a recapitalised banking sector would deploy those resources to support economic development and sustain public confidence.
“It is no longer whether the banking sector can raise capital, but what a recapitalised banking sector does with the additional capital that has been raised,” he said.
Chukwuemeka urged journalists to interrogate policy issues beyond the headlines and seek deeper understanding of economic reforms.
“The quality of public understanding of monetary policy and financial system reform depends substantially on the accuracy, context and judgement that finance correspondents and business editors bring to their reporting,” he added.
Also speaking, Director of Stakeholder Engagement and Institutional Relations, Hakama Sidi-Ali, commended finance correspondents and business editors for their support and contributions to the transformation of the CBN’s communications strategy over the past three years.
She attributed many of the bank’s communication successes and recognitions to constructive engagement with the media and urged journalists to extend the same support to the new leadership of the Corporate Communications and Investor Relations Department.
