Business

June 25, 2024

Stockbrokers’ Institute proffers solution for banks recapitalisation

Bank

By Peter Egwuatu 

As a prelude to investiture of the 13th President and Chairman of the Governing Council of Chartered Institute of Stockbrokers (CIS), Mr Oluropo Dada, this Friday, the Chartered Institute of Stockbrokers (CIS), has offered ten recommendations to Central Bank of Nigeria (CBN) and capital market regulators to ensure successful implementation of banks’ recapitalisation programe. 

In a paper titled: “Stockbrokers’ Position Paper on the Banking Sector Recapitalisation Programme”, released at the weekend, the Institute noted that the programme would position the banks in Nigeria to support the growth of the economy, position them for global competitiveness, promote financial inclusion and generate about N3.9 trillion. 

In the paper, the CIS stated: “In order to ensure effective capital raising exercise by banks, the Institute strongly recommend as follows:  There should be a wholesome adoption of technology in every stage of the process. As we have seen in recent public offerings, the path of reaching out to investors through telephone apps is what endears the young generation, including the millennials to modern day investments. Banks should consider raising a significant portion of the additional capital through public offers, in order to increase the number of investors in the market. It is sad that, in a country of over 200 million people we still have just about 7 million people that have investments in the capital market. So, attracting more new investors should be a key objective of the exercise.

“It is important to emphasise that time is of essence in the recapitalization process. We recognize the fact that the Central Bank of Nigeria (CBN) will have to check and verify the list of subscribers to every new bank issue before the list is sent to the SEC for approval to allot shares. We urge the CBN to carry out this verification process speedily, using technology, in order to reduce the time involved. 

“Furthermore, the issuing houses may send the list of subscribers to the CBN in batches, on a daily or weekly basis, from the date the issue opens until it closes. By this, the load of verification will be substantially reduced for the CBN when the offer closes and returns are made. 

“Between the CBN and the SEC, the time taken from an offer’s closing date to the allotment date should not exceed 20 working days. This assurance is important as investors do not want their monies to sit idle for an extended period of time. 

“The CBN should, in the course of this process, open up the banking industry to more players, to deepen competition and de-concentrate market control from the hands of a few big banks”.