As the race for banks’ recapitalisation takes off, the Central Bank of Nigeria (CBN), the Economic and Financial Crimes Commission (EFCC) and other law enforcement agencies are set to closely supervise the process to prevent the injection of illicit funds into the banking system.

This was disclosed by the apex bank in a circular signed by Mr Haruna Mustafa, the Director of the Financial Policy and Regulation Department.

The circular was specifically addressed to commercial, merchant, and non-interest banks, including promoters of proposed banks, on the new minimum capital requirements for banks.

The circular mirrors the apex bank’s strong resolve to block any attempt by bank owners and their promoters from warehousing proceeds of criminality in the banking system or using such ‘dirty funds’ to fortify their capital base.

Arising from that, banks are required to conduct comprehensive anti-money laundering screening checks. This includes Know Your Customer (KYC), Customer Due Diligence, and monitoring suspicious transactions to prevent the use of illicit funds in the recapitalisation exercise.

The circular read: “The CBN has robust anti-money laundering regulations which will be strictly enforced, with the active collaboration of relevant law enforcement agencies.

“In addition, the CBN will require all banks to ensure that appropriate and effective anti-money laundering screening/checks (Know Your Customer, Customer Due Diligence and Suspicious Transactions Monitoring, etc) are conducted.”

More so, the circular addresses the vetting of new investors and significant shareholders. It emphasizes the need to ensure that only individuals and entities meeting the ‘Fit and Proper’ criteria are allowed to significantly invest in or own shares in banks.

The measure calls for the strict enforcement of background checks on all prospective significant shareholders, as well as directors and senior management staff, to uphold the sector’s leadership and ownership integrity.

“The CBN will actively monitor and supervise the recapitalization process to ensure compliance with set guidelines.

“This will involve the conduct of on- and off-site reviews, verification of capital, periodic interventions when necessary and broader stakeholder engagements.”

The CBN further identified the options available to banks for capital augmentation.

“Banks may meet the new requirement through the following options: a. Issuance of new common shares (by way of public offer, rights issues, or private placements); b. Mergers and Acquisitions (M&As); or c. upgrade/downgrade of their respective license category or authorization.

“The CBN will issue guidelines to prescribe the definition, options and approaches to meeting the new minimum capital requirement.”

The apex bank added that the paid-up capital and share premium will be the sole components considered for the new capital levels, explicitly excluding Additional Tier 1 (AT1) Capital.

On Thursday, the CBN announced the new capital requirements for banks.

Top banks with international footprints are now required to have a N500 minimum capital base to boost their global competitiveness.

National authorization-holding banks are tasked to increase their capital to N200 billion, while regional banks have been set a threshold of N50 billion.

Merchant banks are also part of this recapitalization push, with a set minimum capital of N50 billion.

Non-interest banks operating nationally and regionally must meet capital requisites of N20 billion and N10 billion, respectively. (Daily Sun)

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