Loan recovery good for banking sector – Stakeholders

By Udeme Ekwere

Monday, 18 Oct 2010

Stakeholders in the financial sector have said that the aggressive activities of some banks at recovering loans owed them is a good move that is capable of boosting capitalisation.

They said the move was capable of enhancing managements’ credibility.

The Registrar/Chief Executive Officer, Institute of Credit Administration, Dr. Chris Onalo, who spoke to our correspondent on Saturday, said the recoveries were an added income to the banks, maintaining that they could be deployed into improving their liquidity position.

The Managing Director/Chief Executive Officer, Oceanic Bank International Plc, Mr. John Aboh, recently told customers and shareholders that the bank had recovered N110bn in one year.

Onalo commended the move, saying that the bank was gradually pulling itself out of the doldrums.

He said, “The journey into getting more investors may not actually need more investors to put in their money for these banks.”

According to him, the bail-out funds given to banks by the Central Bank of Nigeria will have to be paid back, which may lead to the banks not seeing a short-run impact of the recovered loans.

An industry source, who pleaded anonymity, said, ”There is no doubt that the restitution of ill-gotten assets in the sector will go a long way in the bid of these banks to recapitalise successfully.

”But adequate capital alone does not guarantee the competitive strength and attraction of a financial institution. Trust must be at the root. That is one thing that the banks have relentlessly laboured to do since the CBN reforms started.”

However, the Chairman, Coordinating Committee, Zonal Shareholders‘ Association, Brig. Emmanuel Ikwue (retd), said there was the need to secure the best future for all stakeholders in the financial sector.

Commenting on the need for recapitalisation in the sector, he urged banks’ shareholders to be open-minded in the consideration of capital raising alternatives presented by the boards.

Source: Punch

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