By Agency reporter

Friday, 17 Dec 2010

The Chairman, Ikorodu District Society, Institute of Chartered Accountants of Nigeria, Mr. Samson Disu, has described the intended recapitalisation of the banks rescued by the Central Bank of Nigeria last year as a step that will help reposition the ailing banks for business.

Disu, in an interview with our correspondent, said the issue of recapitalisation had arisen because some of the banks concerned were operating with negative capital.

”Negative capital arose because most of their lending (assets) are already classified and they have to make provision in their books; the provision was such that it was more than their profit and reserve, thus it ate up their capital and the bank might cease to operate as a going concern,” he said.

Commenting on the sufficiency of the time frame for the process, he said if the CBN gave a time lag of two years, some of the banks would not make it, while some would have completed the process if it was for just six months.

Source: Punch