Recapitalisatin likely to stimulate stock market — expert

Professor of Capital Market, Uche Uwaleke says bank’s recapitalisation is likely to rejuvenate the stock market.

Uwaleke told the News Agency of Nigeria (NAN) that the banks recapitalisation idea of the Central Bank of Nigeria (CBN) was a welcome development.

He said that capital was needed to finance big-ticket projects, especially as the government was targeting a one trillion dollar economy in a few years’ time.

He suggested the use of differential cash reserve requirements as well as preferential participation in the forex market for well capitalised banks as some of the incentives.

“It should be more about incentives than coercion.

“Some Deposit Money Banks (DMBs) are already making efforts to increase their capital base.

“The CBN can use prudential guidelines to strengthen the present tiered arrangements.

“The use of the CAR (the ratio of a Bank’s capital to risk weighted assets) is a good example.

“For whatever it is worth, smaller banks playing at the regional level should not be regulated out of existence,’’ he said.

NAN recalls that the Chartered Institute of Bankers of Nigeria (CIBN) led by its President, Dr Ken Opara, had said that banks were ready for the recapitalisation.