May 20, 2024

Recapitalisation: CBN gives reason for exclusion of banks’ retained earnings

The Central Bank of Nigeria, CBN, has reiterated that it excluded banks’ retained earnings to meet its newly announced minimum capital requirement in a bid to ensure the injection of fresh capital into the financial system.

Director Financial Policy and Regulatory Department, FPRD at CBN, Haruna Mustafa, disclosed this in a recent podcast on ‘Banking Sector Recapitalisation Programme 2024’.

DAILY POST recalls that the apex bank raised capital requirements for all Nigerian banks by at least 100 per cent last month.

CBN gave banks two years to meet the requirement.

However, analysts in the sector have criticized the exclusion of banks’ retained earnings.

Reacting to the criticism, Mustafa said: “Section 9 and Section 63 (2a) of the Bank’s and Other Financial Institutions Act, 2020, empower the Central Bank to determine the capital of banks and the timeline within which banks should comply with that requirement.”

The apex bank stressed that the exercise, which took effect on April 1, 2024, will strengthen the banking sector’s resilience and set the path for the Federal Government’s proposed $1 trillion economy.

Source link

Leave a Reply