Nigerian banks are well-positioned to meet the Central Bank of Nigeria’s (CBN) directive to increase their capital base.

The president of the Chartered Institute of Bankers of Nigeria (CIBN), Ken Opara, gave the assurance in Abuja yesterday at the 22nd National Seminar on Banking and Allied Matters for Judges.

Opara highlighted the banks’ readiness and capability to raise the necessary funds through various means, including bond issuance and capital raising from the stock market.

The CIBN Chief insisted that the banking industry has the financial strength and experience to successfully achieve the recapitalization goal as well as finance the government’s projected $1 trillion Gross Domestic Product (GDP) economy.

He pointed to the banks’ track record of exceeding previous capital base requirements and the depth of the Nigerian stock exchange as evidence of their ability to raise the necessary funds.

Opara emphasised that the recapitalization process is ongoing and that the banks are actively engaged in preparing for the increased capital requirements. He assured that the banks will be ready to comply with the CBN’s directive whenever the specific amount is announced.

According to Opara, “One trillion dollars is something that is very important, it’s achievable because already there has been different capital raising process, you will also see that banks have raised bonds as much as possible and have repaid those bonds when they mature, it’s not a difficult thing to be bothered about funding $1 trillion, I think the major thing is that the industry is deep, they have deep pockets, they have the financial strength.

“The stock exchange where they are going to go to the market to raise this is also quite deep, the stock exchange for instance is the second biggest stock exchange market in Africa, which tells you clearly that it is a deep market and we have the ability to raise funds that will fund that project as much as possible so we are very prepared.”

“The CIBN president identified four major challenges giving Nigerian bankers sleepless nights. Specifically, he bemoaned the unlawful harassment of bank officials by the Economic and Financial Crimes Commission (EFCC) among other challenges.

“With regards to the issuance of Bankers Orders by magistrate courts, the CIBN President noted that magistrate courts were fond of issuing Bankers Orders, which are orders to freeze bank accounts, without proper legal authority.

“These orders he said are often issued based on a non-existent or repealed law, and they cause hardship for banks, who are open to litigation from their customers if they comply with the orders. He then called on the “Chief Magistrate Court to intervene and ensure that Bankers Orders are only issued by the High Court,” he added.

Opara lamented that EFCC officials were always storming banks and demanding that they place Post No Debits (PNDs) on customers’ accounts without an order from the court.

He said: “This is a violation of the legal provisions on confidentiality of bank accounts. When banks demand an order of court, EFCC officials harass and intimidate bank officials and, in some cases, arrest them. Banks are calling for EFCC to be held accountable for their reckless actions, in order to curb the abuse of power.”

Opara also frowned at what he called “inappropriate deployment of garnishee.”

According to him, “judgment creditors are often proceeding against all banks as garnishees, without first verifying the indebtedness of the bank to the judgment debtor. This practice imposes unreasonable costs on banks, who are forced to pay legal fees even if they do not have the judgment debtor’s funded account. In some cases, banks do not receive a summons from the court for the hearing, and the court may proceed to issue a garnishee absolute judgment on the bank.”

He then called on the judiciary to address this long-standing problem in order to protect depositors’ funds

The CIBN president noted that cybersecurity incidents are on the rise across the continent, and the financial sector is especially susceptible to cyber-attacks.

“The Central Bank of Nigeria (CBN) is taking steps to address this issue, but the judiciary also needs to play a role. Banks are calling for the judiciary to collaborate with relevant bodies to develop a structure and build capacity to adjudicate on cybercrime cases in Nigeria.”

The governor of the Central Bank of Nigeria (CBN) Mr. Yemi Cardoso who was represented by Mr. Kofo Salam- Alada noted that a robust and efficient judicial system acts as a magnet for Foreign Direct Investment (FDI), as investors seek stable and predictable environments where their business interests can be protected and disputes can be resolved fairly and expeditiously.

This FDI influx, he said, “strengthens a nation’s foreign reserves, moderates inflation, and stabilizes exchange rates, paving the way for sustainable economic growth and price stability.”

According to the CBN Governor, “whilst the judiciary does not actively participate in the formulation and implementation of policies geared towards economic development, its role in interpreting and pronouncing on these policies when they are brought before the Courts for adjudication is indicative of the judiciary’s indirect involvement in monetary and economic policy formulation and implementation.

“Thus, the Judiciary invariably contributes to the effectiveness of the monetary policy, financial system stability, economic growth, and development through their interpretation of statutes and sometimes giving effect to the acts of the Government and its agencies, where such statutes and acts relate to monetary policy, financial system stability, growth, and development.” (The Nation)

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