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Senate endorses N25bn base for banks& No extension of deadline Soludo
By Tony Icheku and Joe Obi, Abuja
Tuesday July 20, 2004
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Soludo
Photo: Sun News Publishing
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The Senate Committee on Banks, Insurance and Financial Institutions Monday endorsed the Central Bank of Nigeria
(CBN) directive to commercial banks to increase their capital base to a minimum of N25 billion between now and
December 2005.
The approval came after governor of the apex bank, Professor Charles Soludo and its top management met behind closed
doors with the committee for four hours.
Addressing journalists after the meeting, Soludo affirmed that there is no going back on the directive, neither
will an extension of time be allowed.
Soludo who described the discussion at the meeting as very, very engaging and very frank, further affirmed that
the N25 billion minimum capital base is just one of the initiatives to create very strong banks and to move the
economy forward.
He further disclosed that the CBN will soon announce detailed guidelines for mergers and acquisitions in the banking
sector.
He also added that though there had been suggestions to shorten or extend the 18 months
time-frame, the CBN will make no changes.
"The period of 18 months is really very, very generous time-frame for banks which are already convinced of
the inevitable need for merger as a means of meeting the capital base.
"If a bank is thinking of the length of time it will take alone to meet the criteria, then 18 months might
seem small. But if you are thinking of the length of time it will take for a group of banks to come together, nothing
stops them from doing so within six months," Soludo said.
Profferring that further consultations and discussions continue on the reform agenda, the CBN governor also disclosed
that several banks have already entered into talks towards mergers.
He pointed out that the new policy came up due to the "need for very strong, reformed and strengthened banking
system able to play developmental roles in order to move the Nigerian economy forward.
"We are of the view that the N25 billion should indeed be the minimum, barest minimum because we are convinced
that relative to the size of the economy, the banks that will emerge, even if they have only N25 billion, will
still be very small banks relative to the size of the economy. But they will be much stronger than many of the
banks we have today."
Also addressing the press, Senator Zik Sunday Ambuno, chairman the Senate Committee on Banks, Insurance and Financial
Institutions, said all members of the committee agreed on the need for the new capital base.
Affirming that Soludo means well, he said there is no need for panic in the sector.
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