Lukmon Akintola,
Lagos
The recapitalization mandate issued by the Yemi Cardoso-led Central Bank of Nigeria (CBN) is sparking concerns among depositors of tier-2 banks, including Keystone Bank.
During the 58th annual bankers’ dinner hosted by the Chartered Institute of Bankers of Nigeria, CBN Governor Cardoso emphasized the need for Nigerian banks to scale their capital base to support the country’s push toward a $1 trillion economy.
“We need to ask ourselves: will Nigerian banks have sufficient capital to service a $1 trillion economy in the near future? In my opinion, the answer is no—unless we take action. Therefore, we must make difficult decisions regarding capital adequacy,” Cardoso said.
To this end, the CBN introduced new capital requirements: N500 billion for international banks, N200 billion for national banks, and N50 billion for regional banks.
www.theoctopusnews.com, reported that many top-tier banks have responded swiftly. Financial institutions like Fidelity Bank, Access Bank, GTCO, and Zenith Bank have raised capital through public offerings and rights issues. Fidelity Bank’s capital-raising efforts were notably successful, with its rights issue becoming the most active stock in the market during that period.
Investment analysts from Arthur Steven Asset Management highlighted Fidelity Bank’s shares as valuable inflation-hedging assets, predicting a 57% short-term capital gain for investors.
Access Bank, with an audited 2023 capital base of N251.81 billion, required only a modest N248.19 billion to meet the new standard for international banks. Meanwhile, United Bank for Africa (UBA) is yet to raise funds but is expected to act before the deadline.
Some tier-2 banks, like Unity Bank and Providus Bank, have opted for mergers to meet the new requirements. Their merger, approved by the CBN, includes a financial support package worth N700 billion.
In contrast, Keystone Bank is struggling to chart a clear path forward.
Keystone Bank faces even greater challenges. Long under scrutiny for its financial health, the bank has yet to secure new investors despite appointing Hassan Imam as its Managing Director and CEO. The bank’s lackluster financial performance has led industry experts to question its ability to survive the recapitalization mandate.
Amidst the dire situation, concerned depositors of the bank have asked if the financial institution would be able to sustain the quality of service they have been used to if they end up merging or downgrading their license. There have also been questions regarding safety of depositors’ funds.
Financial analyst Destiny Sekibo highlighted the importance of transaction trends as an indicator of a bank’s strength. “Ask yourself how often you receive payments from Keystone Bank. These basic indices reflect a bank’s financial strength,” Sekibo said.
As the recapitalization deadline approaches, Keystone Bank face mounting pressure to stabilize their operations and reassure stakeholders. Failure to meet the CBN’s requirements could result in license downgrades, mergers, or even further financial instability.
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