Daily Independent Online.
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Monday, July 26, 2004.
Adegbite suggests N15b capital base for banks
By Bethel Obioma
Insurance Correspondent, Lagos
Former Wema Bank Plc managing director, Chief Samuel
Adegbite, has said N15 billion capital base for banks was more realistic and
easily achievable by operators given the fledging condition of the sector and
the nation’s economic woes.
Describing the N25 billion target given to banks by
the Central Bank of Nigeria (CBN), as a tall order, Adegbite said a progressive
increase of banks’ capital base was a more viable option in view of the
role banks play in creation of wealth.
“I believe the capitalisation process should be
in progression. That is, N15 billion by 2005, and then three or four years
later, you increase it to N20 billion and jerk it up in another three or four
years time.
“That will not distort the system in a way that
there would be chaos in the sector and unemployment in the country. As you
know, banks are the greatest employers of labour now,” he said.
He explained that while he agreed with the
CBN’s reform agenda, the process of execution must take cognisance of the
prevailing economic environment in the country.
He said any reform or policy that cannot improve the
lot of the people would not amount to much, as the success of reforms are
measured by the level of positive impact it leaves on the citizenry.
On the impending capital increase expected in the
insurance sector, Adegbite said a capital base of N2 billion would put
composite insurers in the position to increase their risks retention capacity
and overall service delivery processes.
He added that this would enable insurers compete
effectively in the business of pension, as enshrined in the new Pension Act,
oil and gas insurance, and other special risks.
“I believe that N2 billion would be adequate for
insurers to restructure their business processes to drive transactions in
keeping with global standards,” he said.
