By Ademola Alawiye Thursday, 7 Oct 2010

There are indications that more Deposit Money Banks will opt for regional licences because of fears that they may not meet the regulatory minimum capital base to run as national banks.

A senior official of the Central Bank of Nigeria, who craved anonymity, told our correspondent on Tuesday, that some of the banks might not meet the N25bn regulatory capital requirement and 10 per cent minimum capital adequacy ratio.

The source said that some of the banks, whose capital was massively eroded, would find it easy to meet the minimum capital requirement of regional banks instead of operating as national banks.

He said, ”Some of the banks are likely not going to meet the minimum capital requirement of a national bank, and since most of them have strength and are widely dispersed in some specific regions, we are advising that they go as regional banks.”

According to the draft proposal by CBN, banks that will operate as national banks will maintain the current minimum capital base of N25bn, while regional banks will be required to have a minimum capital base of N10bn. 

Banks that will operate as international banks will maintain a minimum capital base of N100bn.

This is coming at a time the CBN disclosed that Wema Bank Plc had applied for a regional licence. 

The apex bank, in a statement on Tuesday said, ”Wema Bank Plc has applied to CBN seeking a banking licence to operate as a regional bank with a regulatory capital requirement of N10bn. It has also applied to and obtained approval from the Securities and Exchange Commission to raise N7.5bn fresh capital through a Special Placement Offer.”

The source also said that the crisis in the banking sector and the subsequent reforms had given opportunity to some Nigerian banks to grow their capital base.

He said, ”Some of the banks that passed the stress test have been able to build their capital base to run as international banks. They actually leveraged on the problems of other big banks, which failed the test to grow their business.”

When our correspondent contacted some of the banks to confirm this development, some of them said that they were not sure of their recapitalisation plan, while others denied the report, claiming that they had enough capital to run as national banks.

 

Source: Punch