Industrialist Advises Bank CEOs on Ownership
By Amarachukwu Ona
Banks' managing directors/chief executive officers have been advised not to tread the path of the general tendency of holding on to small companies without wanting to dilute ownership in any form.
The call was made by an industrialist, Prince Julius Adelusi-Adeluyi, while speaking on "Facing New Challenges in Banking" at the first Banks' Chief Executives Forum" held last week in Lagos, following the news of N25 billion capital base for banks to be met by December 2005.
"I wish to appeal to you not to thread the path of the general tendency for Nigerians to hold on to small companies without wanting to dilute ownership in any form, when in fact, it will imply owning a piece of larger companies, which would be stronger, more viable and could ultimately be more valuable for the individual shareholder.
"Various individuals and institutional bodies, including the CBN, are of the opinion that we have too many banks in Nigeria, a number of which are without strong capital base. What we really need are a good number of banks with strong asset and capital base.
"Mergers and acquisitions among banks will lead to the emergence of fewer, individually larger and stronger banks, which would in turn improve the economy", he said.
Adeluyi noted that this has further strengthen the case for mergers, which had lingered for long in the light of Basel 11 Accord, which Nigerian banks must comply by 2006.
"The case for mergers become even stronger in the light of Basel 11 accord which Nigerian banks must comply by 2006, as it is not practicable for all Nigerian banks to fully re-capitalise to meet the related adequacy requirement between now and then", he added.
Towards this end, Adeluyi called on regulatory authorities to review and re-appraise the existing regulatory arrangements to make it more responsive and keep pace with the dynamic nature of the banking sector.
"More importantly, industry operators, of which this forum is an embodiment, owe the society the responsibility to ensure that the distress syndrome does not assume the magnitude of the past decade", he emphasised.
He reminded them that the financial system is the hub of productive activity of our economy, as it performs the vital role of financial intermediation.
"The financial system is the primary provider of payment services and the fulcrum of monetary policy implementation. There is no doubt that the contribution of the banking sector to development depends largely on the quality, quantity and efficiency of its services.
"There is no doubt that as countries progress in their wealth creation and income generation drives, their financial institutions invariably enhance their assets, institutions and markets", he said.
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