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...For a better society... Monday, July 26 2004 Vol 17 No.30 News Editorial Opinion Labour Politics Sports Features Columnists Business Money/Market Energy Alaba Market Falae faults CBN on capital base AYODELE ONI, Akure FORMER Secretary to the Federal Military Government, Chief Oluyemisi Falae, has described as too hasty the directive by the Central Bank of Nigeria (CBN) to banks to shore up their capital base to N25 billion. He also said, it was not how large a bank’s capital base is that guarantees success, but the quality of the management. Chief Falae, an Economist and former presidential candidate of the Alliance for Democracy (AD) and former All Peoples Party (APP) during the 1999 election, told reporters in Akure, Ondo State capital weekend that compliance to the directive should have been made gradual. He said in Nigeria, we do the right thing in a wrong way. It is good for banks to have large capital base, but Rome was not built in a day." "A bank that has about N2 billion capital base now, you ask it to go to N25 billion in 18 months. The growth should be gradual. What they need to do is to tell the banks to increase their capital base gradually over time so that they can be stronger and more competitive," he added. Chief Falae also faulted the planned merger by some banks on account of the directive, saying it would breed problems and crisis. "It will cause disruption. A lot of false mergers will occur and once the marriage is not right, it leads to total problem or crisis. "If the banks merged, you can’t have two managers in a place. So, some retrenchment is bound to happen", he added. The former government scribe said what actually matters was the quality of management and the process of loan by the banks, stressing that it is not the capital base that guarantees the success of a bank. According to him, "an incompetent and corrupt management can destroy a bank even with a capital base of N50 billion. "We have military mentality in Nigeria. We need to demilitarise our thinking." "It is not sufficient to say the banks should grow in terms of capital base, we should allow natural growth to occur. "We should allow the big to exist along with the medium and the small. Let the natural process prevail. Don’t force things like a decree. Allow natural growth to occur. The small, big and medium banks will emerge," he added. � 2004 @ Champion Newspapers Limited (All Right Reserved). Powered By dnetsystems.net dnet�

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