Banks Recapitalization Should Be Done In Dollar – Investment Consultant 

The Chief Executive Officer, SD and D, Capital Management, Mr Idakolo Gbolade, says for the banking sector to be resilient and able to effectively fund the 1 trillion dollar economy being proposed by the Nigeria government, the sector’s capital must be valued in dollar or its equivalent.

In an interview with Voice of Nigeria, Mr. Idakolo, said with current economic realities, the capital base of banks can not withstand global headwinds.

“The last recapitalization round put nationalized bank at fifty billion or there about when you combine that or you convert that in dollar you will discover that it is not as much as we would have expected, talking of a trillion dollar economy I think recapitalization should be done base on the dollar equivalent or estimated value of dollar”.

Mr. Idakolo urged the Central Bank of Nigeria to properly categorize banks in order not to destabilize the financial system.

“Every bank in Nigeria should be talking about having at least five billion dollars as recapitalization so that when that is converted we can be able to start moving closer to having capacity or even ten billion, but one thing I also want us to know is that there is segmentation, so those international bank should be able to carry a larger capitalization while the national bank and regional banks should be given proportional capitalization so that we will not run smaller bank out of the system. I believe that the capitalization should be as base on dollar equivalent to what Nigerians stands to be playing at now, any capitalization that doesn’t give a very strong dollar valuation should not even be looked at at all”

Echoing the same sentiment, in another interview, a Development Economist, Dr. Olusiji Aina said the recapitalisation plan by the CBN will strengthen Nigeria’s banking sector.

“Re capitalisation help to strengthen the financial health and stability of banks, the CBN needs to ensure that banks have sufficient capital to absurd potential loses and maintain solvency because when we look at some of the banks we have in the world today, Nigerian banks are some of the most capitalize in the world, this will help to enhance the overall abilities of the banking sector and reduce the risk of banks failure” He said.

He emphasized that the recapitalization process will also promote confidence and trust which is very critical to the growth of the sector.

“capitalisation sends a positive signal to investors, depositors and of course the general public about the strength and the resilience of the banking system, it boost confidence in the sector and also encourages increase investment and deposit which are crucial for economic growth and development especially in this point in Nigeria. It would help to facilitate the economic growth, it will also enhance competitiveness and that is one of the reasons CBN wants to embark on that process”. Dr. Aina stressed.

Olusola Akintonde