Banks To Embark On New Recapitalisation Drive Soon

Experts have expressed optimism that the banking industry would soon embark on new recapitalisation drive owing to the current economic realities in the country.
They said this at the official launch of Proshare Impact Report on Nigeria’s banking sector titled: ‘Reassessing Tier 1 Banks – The Class of 2023,’  in Lagos recently.
The experts spoke on the topic: “Banks are Dead, Banking is Reborn: Bridging Regulatory Compliance, Changing Business Models and Rising Expectations”.
Speaking at the panel session, Mr Johnson Chukwu, the Group Chief Executive Officer (CEO), Cowry Asset Management Ltd., said banks would likely embark on a new recapitalisation drive due to regulatory capital pressure and increase in transaction cost.
“The banks have a complying need beyond increasing their liabilities and to also increase their operating capital because of the shift in exchange rate”, Chukwu said.
He said banks need to shore up their operating capital to fund big businesses.
Chukwu said the return investment made from investing in banks was another factor that would compel banks to embark on new recapitalisation drive to retain investors and make more money.
He also said  banks generate higher return even in a difficult environment when compared with other investment class.
“If you look at the Nigerian capital market performance as of Oct. 12, the All-Share Index had gained 30.93 per cent, the banking sub-sector had gained 60.43 per cent, that’s far higher than the All-Share Index.
“There’s no other investment class that will give more than 60 per cent return like the banks.
“So, in the interest of investors, it makes more sense for them to give their money to the banks because they have the capacity to read the market, trade and generate better returns even in a difficult environment”, he said.
Also speaking, the Chief Financial Officer, EcoBank Nigeria Ltd., Mrs Ibukun Oyedeji, stressed the need for capital and liquidity for banks to remain in business.
Oyedeji said banks must reduce cost through investment in technology to remain in business.
She also said banks must learn how to replicate the Fintech model in order to play actively in that space.
In his contribution,  Dr. Biodun Adedipe, the Founder and Chief Consultant at B.Adedipe Associates (BAA Consult), observed that the major problem of Nigeria was the devaluation of the naira.
“Everything changes in the country whenever there’s change in the exchange value of the naira”, Adedipe said.
He, however, called on the Central Bank of Nigeria to pay more attention to the exchange rate.
Also, Mr. Ayodeji Ebo, the Managing Director, Chief Buisness Officer, Optimus by Afrinvest, said that banks must ensure enhanced risk management to survive the current economic challenges.
Ebo also stressed the need for commercial banks to strengthen their models to boost financial inclusion through technology.
Meanwhile, the 2023 edition of the Proshare Bank Strength Index (PBSI) revealed that Access Bank, Guaranty Trust Company, United Bank for Africa and Zenith Bank retained their ranking as Tier 1 banks
The report said that Stanbic IBTC and Fidelity Bank dropped from the Tier 1 ranking to Tier 11.
“This is according to the methodology deployed by the PBSI, which requires  banks/financial stakeholders holding over the 50th percent are ranked as Tier 1, while those below the mark are categorised as Tier II and III, respectively.
“Ecobank Transnational Incorporated joined the Tier 1 ranking for the 2023 PBSI from the Tier II ranking in 2021/2022.