A financial expert, Mr Johnson Chukwu, has revealed that Nigerian commercial banks must pledge to raise their standards for disclosure and transparency to entice investors to take part in bank recapitalization with confidence.
The Group Managing Director of Cowry Asset Group, Mr Chukwu, addressed key issues in the Nigerian capital market during the Capital Market Correspondents Association of Nigeria’s annual workshop. Speaking on the theme, “Recapitalisation: Bridging the Gap Between Investors and Issuers in the Nigerian Capital Market,” he emphasized the need for strategies to strengthen investor confidence and foster better alignment with issuers.
Chukwu stated that “recapitalisation of banks in Nigeria has become imperative in the wake of evolving global financial dynamics, regulatory changes, and the need for improved operational resilience.”
He clarified that it is important to support and encourage initiatives like the release of thorough and accurate financial statements, risk disclosures, and guidance for the future.
Chukwu stated that banks should concentrate on enhancing their corporate governance, risk management, and operational efficiency to lower perceived risk.
According to him, “By focusing on sound financial health and sustainable business practices, banks can attract institutional investors and foster a broader investor base. Regular engagement with investors through roadshows, briefings, and quarterly updates can also help build confidence in banks’ investor management strategy.”
“Other measures necessary for a successful recapitalization process include simplifying capital investment requirements, reviewing PENCOM restrictions, re-evaluating windfall tax policies, reevaluating the CBN’s Exclusion of Retained Earnings in Capital Computation, and the Review of the CBN Verification Process,” he stated.
Additionally, he asked the CBN and other regulatory agencies to establish a more stable regulatory environment for investors and banks.
“The frequency of regulatory policy changes needs to be moderated to allow for better planning for both banks and the investing public, as well as reduce the regulatory and operational risks associated with these frequent changes.”
The Group Managing Director added that resolving the banking industry’s issues would establish a stable financial climate that would allow the Nigerian capital market to open up new avenues for bank recapitalization.
Manomsi Mallum
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