The Nigerian Development Insurance Corporation (NDIC) has expressed fears that a number of banks in the country may not survive the economic recession presently hitting the country.
According to the Managing Director/Chief Executive of the corporation, Alhaji Umaru Ibrahim who spoke at a public function in Kaduna, Kaduna State, the 23 commercial banks in Nigeria will survive the recession if they increase their capital base by 30 per cent.
Failure to do that would see many of them not being in a position to perform their role in helping Nigeria overcome the recession soon.
But he expressed fears that a lot of the banks may not easily recapitalise, as many sectors were facing some daunting challenges
In 2006, the CBN had directed banks to raise their capital base from N10 billion to N25 billion, while those not able to meet the condition were forced to merge or be acquired by the viable ones.
But findings by NDIC research unit, in its 2016 end of the year report, said before the banks could survive the economic meltdown, each of them should beef up its capital base to at least N30 billion before the end of second quarter of 2017.
Ibrahim said though the banks had been doing all things possible to remain relevant in the difficult times, the low value of naira brought about by recession, has made it necessary that their minimum capital base should be increased.
“Nigerian banks, like other banks across the globe are facing daunting challenges, but NDIC will continue to do everything possible to help them weather the storm,” Ibrahim said.
“For us in the area of supervision and regulation of insured financial institutions, it is very necessary that we follow the trends, and we do everything possible to ensure that our insured institutions, the deposit money banks (DMBs), primary mortgage banks (PMB) and microfinance banks (MFBs) continue to be creative in their products as to be able to weather the storm”, he added.
He said the banks were facing liquidity issues, forex issues, while the annual budget also affects everybody, as well as dwindling revenue and profits.
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