Legit.ng journalist Victor Enengedi has over a decade’s experience covering Energy, MSMEs, Technology and the stock market.
The initiative for banks’ recapitalization has gained momentum, prompting vigilant oversight from the Central Bank of Nigeria (CBN), the Economic and Financial Crimes Commission (EFCC), and other law enforcement bodies.
Their aim is to diligently monitor the process to thwart any influx of illegitimate funds into the banking sector.
Legit.ng recently reported that the CBN announced an upward review of the minimum capital base requirements for banks operating in Nigeria.
Photo credit – EFCC, CBN
Source: UGC
This information was conveyed through a circular issued by the apex bank, signed by Mr. Haruna Mustafa, the Director of the Financial Policy and Regulation Department.
According to The Sun, the circular, tailored for commercial, merchant, and non-interest banks, as well as promoters of prospective banks, outlines the updated minimum capital requirements.
CBN to prevent infiltration of illicit funds
The circular reflects the firm determination of the apex bank to prevent bank owners and their promoters from infiltrating the banking system with proceeds of criminal activities or bolstering their capital with such tainted funds.
Consequently, banks are mandated to implement thorough anti-money laundering measures, encompassing Know Your Customer (KYC) procedures, Customer Due Diligence, and vigilant monitoring of suspicious transactions, aimed at safeguarding the recapitalization process from the influence of illicit funds.
The circular read:
“The CBN has robust anti-money laundering regulations which will be strictly enforced, with the active collaboration of relevant law enforcement agencies.
“In addition, the CBN will require all banks to ensure that appropriate and effective anti-money laundering screening/checks (Know Your Customer, Customer Due Diligence and Suspicious Transactions Monitoring, etc) are conducted.”
CBN to rigorously check major banks’ shareholders
Furthermore, the circular highlights the importance of scrutinizing new investors and major shareholders.
It underscores the necessity of ensuring that only individuals and entities meeting the ‘Fit and Proper’ standards are permitted to make substantial investments in or hold shares in banks.
This initiative requires rigorous enforcement of background checks on all potential major shareholders, directors, and senior management personnel, with the aim of preserving the integrity of leadership and ownership within the sector.
“The CBN will actively monitor and supervise the recapitalization process to ensure compliance with set guidelines.
“This will involve the conduct of on-and off-site reviews, verification of capital, periodic interventions when necessary and broader stakeholder engagements.”
The apex bank instructed that all banks are required to meet the minimum capital requirement within 24 months commencing from April 1, 2024, and terminating on March 31, 2026.
5 banks that would minimum capital base
In related news, Legit.ng reported that analysts and finance experts have supported the CBN’s move to review the capital base of banks operating in Nigeria
In his remarks, Prof Uche Uwaleke supported the re-capitalisation of banks, calling it a positive step.
He claimed that it would also potentially strengthen the nation’s financial system and help the stock market.
Dr. Aliyu Ilias, a different financial analyst, stated that the banks had long anticipated re-capitalisation given their recent trillion-naira gains.
Source: Legit.ng
