Senators deny backing N25b capital base
- Risk managers oppose policy
From Alifa Daniel, Azimazi Momoh Jimoh (Abuja) and Bukky Olajide, (Lagos)
WORRIED by the impression created that the Senate Committee on Banking, Insurance and Finance Institutions has endorsed the N25 billion capital base for banks, two officers of the panel yesterday said that members did not agree to the policy.
Meanwhile, the Credit Risk Management Association (CRIMA) comprising member banks in the country has expressed opposition to the new capital base.
The Senate committee's chairman, Senator Zik Ambuno Sunday and Vice Chairman, Senator Farouk Bello, said yesterday in Abuja that the panel had not reached a position yet on the capital base for banks.
The lawmakers also frowned at the decision of the Central Bank (CBN) Governor, Charles Soludo, to brief the media on his meeting with the senators.
They faulted the action, claiming that a "gentlemanly agreement" was reached with Soludo not to exacerbate the panic in the financial system by addressing the press.
The Senate panel chairman at a press conference said: "I have found it pertinent to invite this press briefing in view of our meeting of yesterday (Monday) and in view of what I read in the newspapers today.
"I never said that the Senate okayed the N25 billion proposed as banks' capital base. I did not say that categorically"
He explained that the committee could not have taken that decision since it was yet to get the view of all stakeholders in the banking sector, adding that letters were just being written to other stakeholders to appear before the committee.
His words: "I said yesterday that the Central Bank and the Senate had fruitful discussions. I did not mention the details. I could not mention the details because that is not how we work.
"The way we work is that we would get the views of the Central Bank, we would get the views of the stakeholders and of course now, we have already written to some stakeholders to hear their views on it and we will now submit our report to the Senate.
"If the leadership says we can air this as the view of the Senate, then we can do that," Zik Sunday said.
The lawmaker explained what he meant when he said that Soludo meant well for the country.
His words: "The CBN governor did inform us about his efforts in trying to revamp the economic. That is why I told you that he meant well. I mean he meant well about the economy. I was not categorical about the N25 billion proposed as banks' capital base."
He denied speculations that some members of his committee were working against the N25 billion banks' capital base because of their interests in many banks.
Members of CRIMA who met at a breakfast meeting yesterday to discuss issues concerning the financial sector reforms observed that the implication of the new N25 billion capital base would lead to poorly thought out mergers with little or no synergies.
At the meeting attended by CRIMA president, Yussuf Ahmed, the group observed that the new minimum capitalisation is not without cost, arguing that apart from the fact that it would lead to declining shareholders' returns, there would be short-term income pressure.
The group, however, stated that the reform has its advantages.
According to CRIMA the recapitalised banks will benefit from access to oil and gas deals, power sector, telecommunications, Maritime and such other large ticket deals and at the same time have access to multilateral funding.
Members also lauded the fact that the new capital base has objectives of exchange rate and price stability, interest rate stability, micro economic co-ordination, improvement in payment systems, sector diversification as well as regional and global integration.
