Banking
Cardoso Says Recapitalisation Will Shield Nigerian Banks From Shocks
By Adedapo Adesanya
The Governor of the Central Bank of Nigeria (CBN), Mr Yemi Cardoso, has said that the banking recapitalisation exercise would lead to the emergence of stronger, healthier and more resilient banks amid rising external shocks in the global environment.
Mr Cardoso said this in London on Tuesday, June 25, 2024, while speaking to stakeholders on The Impact of the Recapitalization of Nigerian Banks at the UK-Nigerian Chamber of Commerce, represented by the bank’s Deputy Governor, Financial Systems Stability, Mr Phillip Ikeazor.
He emphasised the event’s significance and restated the CBN’s commitment to fostering stronger, healthier, and more resilient banks capable of withstanding economic shocks and supporting the Government’s goal of achieving a GDP of $1 trillion by 2030.
The apex bank said it would continue to collaborate with relevant financial institutions, the fiscal authorities and the National Assembly to ensure a successful recapitalisation exercise, including providing adequate protection of property rights and interests of minority shareholders.
According to him, the anticipated impact of the recapitalisation programme will include an increase in banks’ lending capacity, a boost in the volume of foreign direct investment (FDI), and an increase in foreign exchange liquidity.
He said the exercise would also contribute to GDP growth, better risk management, improved credit ratings, a diversified ownership base, better governance and strategic decisions, and increased market volume and value, leading to a more vibrant equity market.
“With the recapitalisation programme, our goal is to trigger the emergence of stronger, healthier and more resilient banks,” he added.
He noted that several factors influenced the new minimum capital requirements, including macroeconomic conditions, stress test outcomes, and the need for improved risk management.
“We will rigorously enforce our “fit and proper criteria” for prospective new shareholders, senior management, and board members of banks, and proactively monitor the integrity of financial statements, adequacy of financial resources, and fair valuation of banks’ post-merger balance sheets,” Mr Cardoso assured.
He noted the significant opportunity it presents to engage investors, policymakers, and technocrats on the critical issue of bank recapitalisation in Nigeria.
Mr Cardoso explained that since he assumed office in October 2023, his priorities at the CBN have included achieving monetary and price stability, maintaining a stable exchange rate, controlling inflation, and creating an enabling environment for businesses.
He explained that the recapitalisation directive excluded retained earnings from the minimum capital requirement to simplify capital calculations and enhance transparency. He elucidated that the decision, rooted in the BOFIA Act 2020, aligns with international standards like Basel III and emphasises core capital elements to improve financial stability.
Reflecting on the successful 2004/5 banking sector reforms that were instituted by now Governor of Anambra State, Mr Charles Soludo, which consolidated the industry, increased capital bases, and boosted resilience against the global financial crisis, the Governor assured that the current recapitalisation initiative aims to build on these achievements.
By Modupe Gbadeyanka
As part of its commitment to deliver quality service to customers, Rand Merchant Bank (RMB) has finally embraced the trade finance software of Union Systems Limited (USL), Kachasi.
The lender said its migration from Finastra’s Trade Innovation (TI) to USL’s Kachasi is a testament to the strength, reliability and competitiveness of this homegrown solution.
Kachasi is Nigeria’s leading indigenous trade finance software built to empower banks with seamless automation, regulatory compliance, and enhanced operational efficiency.
The platform has consistently proven to be a game-changer in the trade finance sector, offering key features such as full compliance with statutory and local regulatory requirements, end-to-end automation of trade finance processes, compliance with international trade regulations, advanced risk management and reporting tools, as well as seamless integration with core banking, local portals and third-party systems.
RMB said its decision to integrate Kachasi into its operations reinforces the platform’s reputation as a trusted trade finance solution.
As international trade becomes more complex, financial institutions require cutting-edge technology to navigate regulatory requirements, mitigate risks, and ensure operational excellence.
“This win affirms our commitment to revolutionizing trade finance automation across Africa. As more financial institutions embrace Kachasi, we remain dedicated to delivering cutting-edge solutions that drive efficiency and elevate the banking sector,” the financial institution stated.
Also, the chief executive of USL, Mr Chuks Onyebuchi, said, “This partnership with Rand Merchant Bank marks a defining moment, not just for Union Systems Limited but for African-built fintech solutions on the global stage.
“The successful transition from Finastra’s Trade Innovation (TI) to Kachasi proves that our homegrown technology is not only competitive but also better suited to the evolving needs of banks and trade finance institutions.
“Kachasi’s seamless automation, deep integration capabilities, and understanding of the local and international trade landscape make it the ideal choice for financial institutions looking to drive efficiency and innovation. This achievement is a testament to our commitment to building world-class technology, and we are excited to support RMB in revolutionizing their trade finance operations.”
By Adedapo Adesanya
Nigerian non-interest bank, TAJBank, is finalising arrangements to raise the sum of N20 billion Mudarabah Sukuk to beef up its additional tier 1 capital with the aim of fueling its business expansion drive in the country.
The issuance is part of its larger N100 billion Sukuk programme.
The new investment initiative, which is coming two years after the issuance of the first-ever N10 billion Sukuk on the Nigerian Exchange (NGX) Limited in 2023, presents a unique opportunity for individuals and institutions to invest in an ethical instrument with a competitive 20.5 per cent per annum return.
The Mudarabah Sukuk, which is open to all investors, is designed to offer a stable and ethical investment option, allowing investors to participate in the bank’s profit-sharing ventures.
According to a statement, the the move underscores its commitment to expand access to innovative financial solutions and promoting financial inclusion in the country.
The Mudarabah Sukuk issuance terms and conditions are undergoing final regulatory assessment and approval processes.
The chief executive of TAJBank, Mr Hamid Joda, said, “We are excited to bring this Mudarabah Sukuk to the market, offering a compelling investment opportunity that aligns with ethical financial principles.”
“This listing on the NGX will enable a wider range of investors to participate in our growth and benefit from our profit-sharing model”, the banker added.
Mr Joda had, at the beating of the gong during the listing of the TAJBank’s maiden N10 billion Sukuk bond on the NGX in February 2023, assured investors that the bank’s board and management would ensure good returns on their investments.
Business Post reports that the bond was over-subscribed by over 115 per cent.
“As TAJBank gets the NGX’s endorsement today on its fund raising for operations, I want to assure all investors in the maiden Sukuk bond offer by our bank that the board and management will surpass their expectations in terms of return on their investment and other benefits,” he said.
By Aduragbemi Omiyale
Top financial technology (fintech) companies in Nigeria, PalmPay and Carbon, have commenced the issuance of Verve cards to their customers.
This allows millions of Carbon and PalmPay customers access to Verve’s extensive payment network, bringing digital payment solutions to previously underserved populations.
They began issuance of the cards following the approval of the Central Bank of Nigeria (CBN), underscoring the apex bank’s commitment to empowering fintech companies and advancing financial inclusion across the country.
The issuance of Verve cards by these firms will bring digital payment solutions to previously underserved populations.
Industry observers note that the decision by both fintech companies to align with Verve stems from the payment card’s network-wide reach and a robust infrastructure across Nigeria and beyond.
Last year, Verve marked its 15th anniversary characterized by its outstanding quality, innovativeness and vast array of options; it also announced that it has issued over 70 million cards, establishing itself as a dominant player in Nigeria’s payment ecosystem.
The domestic card scheme’s impressive penetration makes it a natural choice for fintech platforms seeking to rapidly expand their payment offerings while supporting the CBN’s financial inclusion goals.
Other fintech companies that have previously followed this line in issuing Verve cards include Opay and Moniepoint.
As a homegrown card scheme, Verve has continued to innovate its service offerings to compete effectively with international payment networks.
The company has integrated advanced features, including contactless payment technology and enhanced security measures, such as biometric authentication through other sophisticated recognition systems such as fingerprints.
Through collaborations like this, Nigeria’s journey toward a more inclusive financial ecosystem will be shortened, providing more Nigerians with access to modern banking and payment services through the combined technological capabilities of these financial service providers.
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