No Bank in Nigeria Needs Bail Out
All the 24 banks in Nigeria are strong and therefore do not need any bailout, the Central Bank of Nigeria (CBN) Governor, Prof. Chukwuma Soludo has said. Soludo gave this assurance at the formal opening ceremony of Access Bank office in the United Kingdom. His assurance stemmed from the on-going global financial meltdown, which is spreading like bush fire and has seen several financial institutions like AIG, Lehman Brothers, Merrill Lynch in need of rescue packages, of which the United States of America and United Kingdom governments have coughed out a $950 billion and 500 billion pounds bailout plans respectively.He noted that the European countries are committing over £2.5 trillion to bail out some of their financial institutions, while the global economy is injecting £4 trillion because of “the mistakes made by some people.”The CBN Governor said that even if the need arises for a bail out of the local banks, the apex bank already has a contingency plan and stands ready to support any bank.
All the 24 banks in Nigeria are strong. Our banks (local banks) are making huge profits, declaring bonuses and dividends. Whatever it will take to support our banks, the CBN stands ready. No bank will go under the watch of the CBN. Our banks remain resilient,” he assured. Soludo said that with the rate at which the Nigerian banks are growing, they would soon overtake other bigger banks in Africa within the next few years. He said contrary to insinuations that the banks are not giving out credits to the private sector, the former’s credit to the latter as at last August was some 70.5 per cent on an annualised basis, which had already overshot the estimate for this year. This he said, means that if banks do not give any more credit to the private sector for the remaining two months, the level of credit they have so far given is enough for the economy.
Few days ago at the just concluded World Bank/International Monetary Fund meetings in Washington DC, Soludo had hinted that 11 countries were consulting Nigeria on how to manage the effects of the on-going global financial crisis in their respective countries. He did not however, unveil the names of the countries that have approached Nigeria for such assistance. Soludo, who spoke on behalf of the Nigerian delegation to the meetings, said the 11 countries approached Nigeria with a view to learning how the country was able to take a pre-emptive step to prevent a spill-over of the global financial crises with the banking consolidation exercise. The regulatory induced recapitalisation programme, which raised the shareholders’ funds of banks in Nigeria from N2billion to N25 billion in 2005, reduced the number of banks from 89 to 24. “What the world is doing today is what we ( Nigeria ) did four years ago – the developed countries are now capitalising banks and rescuing banks just like we (the Federal Government) did for Bank of the North. We ( Nigeria ) took a pre-emptive measure. We did not wait for banks to fail before we started recapitalising them. “Before consolidation, the non-performing loans of banks in Nigeria were about 23 per cent, which was close to the trigger point. If we had not done consolidation, many of the banks in the country would have been bankrupt,” he said.
All the 24 banks in Nigeria are strong. Our banks (local banks) are making huge profits, declaring bonuses and dividends. Whatever it will take to support our banks, the CBN stands ready. No bank will go under the watch of the CBN. Our banks remain resilient,” he assured. Soludo said that with the rate at which the Nigerian banks are growing, they would soon overtake other bigger banks in Africa within the next few years. He said contrary to insinuations that the banks are not giving out credits to the private sector, the former’s credit to the latter as at last August was some 70.5 per cent on an annualised basis, which had already overshot the estimate for this year. This he said, means that if banks do not give any more credit to the private sector for the remaining two months, the level of credit they have so far given is enough for the economy.
Few days ago at the just concluded World Bank/International Monetary Fund meetings in Washington DC, Soludo had hinted that 11 countries were consulting Nigeria on how to manage the effects of the on-going global financial crisis in their respective countries. He did not however, unveil the names of the countries that have approached Nigeria for such assistance. Soludo, who spoke on behalf of the Nigerian delegation to the meetings, said the 11 countries approached Nigeria with a view to learning how the country was able to take a pre-emptive step to prevent a spill-over of the global financial crises with the banking consolidation exercise. The regulatory induced recapitalisation programme, which raised the shareholders’ funds of banks in Nigeria from N2billion to N25 billion in 2005, reduced the number of banks from 89 to 24. “What the world is doing today is what we ( Nigeria ) did four years ago – the developed countries are now capitalising banks and rescuing banks just like we (the Federal Government) did for Bank of the North. We ( Nigeria ) took a pre-emptive measure. We did not wait for banks to fail before we started recapitalising them. “Before consolidation, the non-performing loans of banks in Nigeria were about 23 per cent, which was close to the trigger point. If we had not done consolidation, many of the banks in the country would have been bankrupt,” he said.
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