The Central Bank of Nigeria has cautioned Banks to be wary of measuring the success of the recently completed recapitalisation exercise by the amount of capital raised as that alone is not enough.
Rather, it called on banks to pay close attention to the quality of banking services and productive lending it supports.
The Deputy Governor, Corporate Services at the apex bank, Dr Muhammad Abdullahi stated this while giving his keynote address at the ongoing 38th Seminar for Finance Correspondents and Business Editors, organised with the Finance Correspondents Association of Nigeria (FICAN).
READ ALSO: CBN Bags NES Award for Economic Reforms
Abdullahi urged banks to deploy their stronger balance sheets to finance agriculture, manufacturing, services and infrastructure, stressing that lending decisions must be based on viable projects.
While promising that the CBN will continue to pay close attention to governance, asset quality, liquidity and large exposures, he said “a stronger balance sheet must be matched by stronger management of risk.”
On the recapitalisation, Abdullahi said 33 banks met the revised minimum requirements as at the end of the two-year programme.
In a paper on the supervisory perspective, the Director of Banking Supervision, Dr Olubukola Akinwunmi, stated that the recapitalisation exercise mobilised about ₦4.65 trillion, with 72.6 per cent sourced domestically and 27.4 per cent from international investors.
Akinwunmi said while capital adequacy is a necessary condition for resilience, it was not a sufficient one, warning that a well-capitalised bank can still run into trouble through poor governance, weak risk management, deteriorating asset quality or excessive risk-taking.
He further said the CBN was withdrawing the regulatory forbearance introduced during periods of economic stress, as prolonged reliance on relief can obscure the true financial condition of institutions.
According to him, the objective is not to penalise banks but to restore normal prudential standards and ensure that risks are accurately identified, measured, and managed.
