Business
Shareholders Funds To Drive Sale Of Rescued Banks
Sanusi Lamido, governor, CBN worried by the negative perception occasioned by the delay in disposing of the rescued banks, the Central Bank of Nigeria (CBN) is proposing that the Asset Management Corporation of Nigeria (AMCON) will focus initially on purchasing qualifying non-performing loans (NPLs) along with the associated rights to underlying collaterals, when it becomes operational.
Consequently, the apex bank, which has embarked on reconciliatory moves of late to stir dwindling confidence and also carry major stakeholders along in its ongoing reform programme, would want AMCON to concentrate on margin loans given by banks badly hit by the capital market crash, as they are easier to value. Specifically, the development is expected to restore Negative Asset Value (NAV) – bank’s total assets minus total liabilities – through taking over of the bad loans by AMCON, so as to be able to report positive shareholders’ fund. Shareholders’ fund is capital invested in a business by its shareholders, including retained profits or part of a bank’s financial assets consisting of share capital and retained earnings. It is an alternative term for owners’ equity.
The implication is that investors, both local and foreign, will be encouraged to resume talks with CBN-appointed holding managers of the rescued banks which broke down due to fresh discoveries after the due diligence carried out by some of them on the embattled banks. Ultimately, these investors will be expected to contend with the minimum capitalisation, when the problem of shareholders’ funds is solved by the corporation.
In fact, in the wake of the capital market boom in 2008, the banks dipped into shareholders’ funds to purchase, under fictitious names and proxies, shares under the much abused margin loans. But banks, particularly the rescued ones, are not helping matters as they are still charging interest on some margin loans entered in their books as bad, and which AMCON is expected to purchase.
For instance, an acceptance of the letter of resignation from one of the distressed banks to an ex-staff says: “Kindly note that your public offer loan is running at 16.0 percent beginning from your resignation date.” In another instance, dividends that accrued to the shares of the same loan have been taken over by the bank through letters dated September, November and December 2009 from the registrars to the head office of the bank.
However, CBN is said to be disturbed by the delay in the disposal of the distressed banks through mergers and acquisitions, but observed that the only way to reverse the trend is through positive shareholders’ funds.
Interestingly, AMCON is also expected to distribute those assets to investment managers, who will have the option of taking a variety of portfolios through an investment strategy that will be defined by it. This could be through selling some of the shares and going into real estate. Besides, CBN sees it as a vehicle for distributing losses between the banks and the brokers, following the capital market loss of about 70 percent to the crisis.
Justifying CBN’s position, Razia Khan, global head of macro economic research, Standard Chattered Bank said: “In the case of any asset management company, one would expect it to buy assets that can be easily valued first – in this case margin loans – as there is a market for it. Even if higher than market prices are paid for the assets in order to recapitalise the institutions, this is standard practice with AMCs the world over.”
Johnson Chukwu, managing director and chief executive officer, Cowry Asset Management Limited, said: “What the CBN means is that AMCON will basically start with taking over the bad loans of the troubled banks and the collaterals which were used to secure the loans. This action is intended to make sure that their net asset value, which, for the troubled banks is all negative, will be reversed to positive. As you know, the NAV, which is the same thing as the shareholders’ funds is negative for the troubled banks because they had to take losses from their non-performing loans.
”When these loans are taken over by AMCON, the banks will write back the huge provisions they made for the loans into profit or extraordinary income and if the write backs are as high as their negative NAV, they will be able to report positive shareholders’ fund. For the banks to be attractive to new investors, be they local or foreign, they need to have positive shareholders’ funds.
“For instance, if an investor has to take over bank A today, he has to first inject over N200 billion to bring its shareholders’ fund to positive before injecting another N25 billion to meet the minimum capitalisation for banks. If, however, AMCON is able to reverse the negative shareholders’ fund, then the new investor will only have to contend with raising N25 billion.”
Akinbamidele Akintola, research analyst, Renaissance Group, was of the opinion that given the 10-year life span for AMCON, it will be in a position to manage the loans for recovery, post-capital injection, adding that “it would remain a part of CBN regulatory infrastructure going forward to reduce NPL levels in banks.” He however called for a clear and transparent valuation model for taking over the loans.
The Central Bank of Nigeria (CBN) yesterday said 33 banks have met new minimum capital requirements under its recapitalisation programme, raising a combined N4.65 trillion to strengthen the financial system.
The apex bank disclosed this in a statement marking the end of the exercise, which commenced in March 2024 and drew participation from domestic and foreign investors.
The statement was jointly signed by the Director of Banking Supervision, Olubukola Akinwunmi, and the Acting Director of Corporate Communications, Hakama Sidi-Ali.
The statement said “Over the 24-month period, Nigerian banks raised a total of N4.65tn in new capital, strengthening the resilience of the financial system and enhancing its capacity to support the economy.”
The regulator said local investors accounted for 72.55 per cent of the funds, while international investors contributed 27.45 per cent, reflecting continued confidence in the sector.
Commenting on the outcome, the CBN Governor, Olayemi Cardoso, said in the statement, “The recapitalisation programme has strengthened the capital base of Nigerian banks, reinforcing the resilience of the financial system and ensuring it is well-positioned to support economic growth and withstand domestic and external shocks.”
It added that while 33 banks have complied with the new thresholds, a few others are still undergoing regulatory and legal processes.
The statement noted, “The CBN confirms that 33 banks have met the revised minimum capital requirements established under the programme.
“A limited number of institutions remain subject to ongoing regulatory and judicial processes, which are being addressed through established supervisory and legal frameworks.
“All banks remain fully operational, ensuring continued access to banking services for customers.”
The apex bank stressed that the exercise was executed without disrupting banking operations, ensuring uninterrupted access to services nationwide.
It further stated that key prudential indicators have improved, particularly capital adequacy ratios, which remain above global Basel benchmarks.
The minimum ratios were set at 10 per cent for regional and national banks and 15 per cent for banks with international licences.
The bank also said the recapitalisation coincided with a gradual exit from regulatory forbearance, a move it said improved asset quality, strengthened balance sheet transparency, and enhanced overall stability.
To preserve these gains, the CBN said it has reinforced its risk-based supervision framework, mandating periodic stress tests and adequate capital buffers for banks.
It added that supervisory and prudential guidelines would be reviewed regularly to strengthen governance, risk management, and resilience across the sector.
“The successful completion of the programme establishes a stronger and more resilient banking system, better positioned to support lending, mobilise savings, and withstand domestic and global shocks,” the statement said.
The Tide learnt that foreign capital inflows into Nigeria’s banking sector rose by 93.25 per cent year-on-year to $13.53bn in 2025, up from $7.00bn recorded in 2024, amid the ongoing recapitalisation drive by the Central Bank of Nigeria.
Data from the National Bureau of Statistics capital importation report showed that the banking sector remained the dominant destination for foreign capital, accounting for $13.53bn of the total $23.22bn recorded in 2025, representing 58.26 per cent of total inflows, up from 56.81 per cent in 2024.
The surge reflects heightened investor interest in Nigerian banks as they raised fresh capital to meet new regulatory thresholds introduced by the apex bank, with industry-wide recapitalisation activities driving large-scale inflows across all quarters of the year.
However, the Centre for the Promotion of Private Enterprise (CPPE) recently raised concerns over weak credit flows to small businesses despite recent banking sector reforms.
The CPPE, led by a renowned economist, Dr Muda Yusuf, acknowledged that the ongoing bank recapitalisation exercise by the CBN has strengthened the financial system, but warned that the benefits have yet to translate into meaningful support for the real economy.
The facility will be disbursed through participating Microfinance Institutions (MFIs), which will in turn extend the loans to their customers, particularly SMEs, as they directly interface with businesses at the grassroots level.
The Executive Director of COMCIN, Mr. Micheal Ogbaa who represented the Chairman, Dr. Iredele Oyedele (FCA, FCCA), said the initiative is designed to strengthen micro-lending institutions and expand access to finance for grassroots entrepreneurs, particularly women and youths in the informal sector.
Ogbaa explained that COMCIN does not lend directly to individuals but works through its network of microfinance and cooperative institutions, which in turn provide loans to end users.
“We came together to advocate for the microfinance ecosystem. Commercial banks often exclude people at the grassroots, but our members are positioned to reach them. This facility will empower them to do more,” he said.
He noted that the loan scheme offers low interest rates and flexible repayment plans, making it more accessible to small business owners.
According to him, about 90 percent of beneficiaries are expected to be women, who play a key role in sustaining families and driving economic activities at the local level.
“Our focus is on traders, service providers, and players in the informal sector. These are the real movers of the economy. By supporting them, we are strengthening families and contributing to national development,” he added.
Ogbaa disclosed that eligible SMEs with proven integrity and business track records could access up to N5 million each through participating micro-lending institutions. The rollout has commenced in Lagos and will extend to Abuja, Enugu, and other regions, including the South-West, South-East, and North-East.
He said 12 micro-lending institutions have already benefited from the scheme, while 85 applications are currently being processed under the pilot phase.
“Our target is to reach at least 100,000 SMEs nationwide. We are building a platform that connects funding partners with credible micro-lending institutions, creating a reliable channel for financial inclusion,” Ogbaa said.
He added that COMCIN is also working to attract larger funding pools from development finance institutions and private investors, noting that successful implementation of the pilot phase would boost confidence and unlock more capital for SMEs.
“We have seen encouraging testimonies from early beneficiaries. As we demonstrate transparency and efficiency, more institutions will be willing to channel funds through us,” he said.
