Yinka Kolawole
The Mortgage Banking Association of Nigeria (MBAN), the umbrella body of primary mortgage institutions (PMIs) in Nigeria, has advocated that the minimum capital base being proposed for the mortgage banks be pegged at N3 billion as opposed to the N5 billion being contemplated by the Central Bank of Nigeria (CBN).

It would be recalled that the apex bank had, in a circular on review of universal banking model dated March 30, 2010, issued by its Ag. Director of Banking Supervision, Mr. J. O. Ajewole, proposed a minimum capital base of N5 billion for mortgage banks.

The proposal also precludes them from taking demand deposits and having equity investment in property development, among other proposals.

Some operators in their reactions then, told Vanguard that the move by CBN was like a death knell for the PMIs, noting that it would be difficult for them to raise such capital at this time, except for those that are subsidiaries of regular banks.

But an official of MBAN told the News agency of Nigeria (NAN) in Lagos that the association has been meeting with the Other Financial Institutions Department (OFID) of CBN on the issue for some time, with the association recommending N3 billion in order to ensure the presence of PMIs across all parts of the country.
According to him, most of the 98 mortgage banks currently in operation are located in Lagos and Abuja while those in other states are owned by state governments. He said that some state governments are unable to meet the N100 million capital base and wondered what would happen if it was increased to N5 billion.

The association’s position on the N3 billion, according to the MBAN official, is to ensure that all members benefit, adding that some vibrant institutions had already exceeded the proposed N5 billion. He said that the association was also contesting the CBN proposal to reduce the scope of their operations.

The official expressed optimism that the association’s position would be considered when the final decision on recapitalisation would be taken, adding that negotiation with CBN would be on until a public pronouncement is made.