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Bank Recapitalisation : “We must address banks capital adequacy to grow economy” Says Bayo Onanuga

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….Investors inject N110bn in UBA, FBNH, Zenith, Access, other stocks in two days

Presidency on Tuesday expressed support for the banking sector consolidation initiative of the Central Bank of Nigeria, saying it would help the country to grow the economy to a new height.

This came barely five days after the CBN said it would ask banks to raise new capital.

According to the Presidency, it has become important to consider the capital adequacy of Nigerian banks in light of the projected $1tn economy in eight years.

Representing President Bola Tinubu at the 40th Anniversary Celebration of The Guardian Newspapers in Lagos on Tuesday, the President’s Special Adviser on Information and Strategy, Bayo Onanuga, said there would be a strong need to revisit the capital adequacy levels of banks

Onanuga said, “On the economy, that is facing all of us, our ambition to attain the $1tn appears daunting but we believe that it is achievable with God on our side and our collective determine. This explains the reason the VP and I have been on the road trying to attract huge investments into various phases of our economy; agriculture, oil and gas and others.

“To arrive at the $1tn economy, we must address the capital adequacy of our banks that will prepare the fuel for this journey.”

At the 58th annual Bankers’ Dinner last Friday, CBN Governor, Olayemi Cardoso, had said a stress test performed on Nigerian banks revealed that while they would withstand mild to moderate stress, they would be unable to service a $1tn economy projected by Tinubu in seven years, hence the need for recapitalisation.

Cardoso said, “Stress tests conducted on the banking industry also indicate its strength under mild-to-moderate scenarios of sustained economic and financial stress, although there is room for further strengthening and enhancing resilience to shocks. Therefore, there is still much work to be done in fortifying the industry for future challenges.”

He added, “Considering the policy imperatives and the projected economic growth, it is crucial for us to evaluate the adequacy of our banking industry to serve the envisioned larger economy. It is crucial to evaluate the adequacy of our banking industry to serve the envisioned larger economy. It is not just about its current stability. We need to ask ourselves, can Nigerian banks have sufficient capital relative to the finance system needs in servicing a $1tn economy shortly, in my opinion, the answer is no, unless we take action. As a first test, the central bank will be directing banks to increase their capital.”

Meanwhile,findings show investors have begun positioning themselves in the stocks of Tier-1 banks listed on the Nigerian Exchange Limited following the announcement of the proposed recapitalisation of the banks.

There are reports some big banks may be eyeing smaller and weaker ones in the event the proposed consolidation in the sector fuels possible acquisitions.

Meanwhile, findings showed that some listed financial institutions gained over N101.18bn on Monday and Tuesday, following the announcement of the proposed banking sector recapitalisation.

An analysis done by one of our correspondent at the close of trading on Tuesday revealed that at least six of the lenders added to their market capitalisation in the two trading sessions this week, while five banks shed their value and two remained unchanged.

The lenders who gained included United Bank for Africa Plc, whose market capitalisation rose to N731.87bn on Tuesday from N713.06bn on Friday, the market cap of Zenith Bank Plc appreciated by one per cent to N1.10tn and Access Holdings Plc’s market cap rose by four per cent to close Tuesday’s trading at N639.81bn.

FBN Holdings Plc has been the biggest gainer so far as its market cap stood at N800.47bn on Tuesday from N717.91bn on Friday, marking an 11 per cent appreciation. The market cap of Sterling Financial Holdings Plc rose by 4.51 per cent to N106.81bn and the value of FCMB Group’s share rose by one per cent to N137.63bn.

The five lenders who lost during the period under review include; Guaranty Trust Holding Company (-1 per cent), Jaiz Bank (-2 per cent), Unity Bank (-8.69 per cent), Wema Bank and Stanbic IBTC Holdings (-3.08 per cent) to close with their market capitalisation at N1.13tn, N55.27bn, N19.64bn, N66.61bn and N816.29bn respectively.

The market capitalisation of two lenders, Ecobank Transnational Incorporated Plc and Fidelity Bank remained unchanged over the two-day period at N293.59bn and N288.11bn respectively.

A bank CEO, who earlier spoke to The PUNCH, welcomed the CBN policy direction regarding the recapitalisation of the banks, saying his institution was ready to raise fresh capital though it had yet to conclude the modality.

“Even before the CBN governor made the pronouncement, our bank was already considering raising fresh capital to significantly increase the capital base. This should happen in the first quarter of 2024. So, we are in tune with the CBN governor,” the CEO of a Tier-1 lender told one of our correspondents on Saturday.

In the last few months, First Bank of Nigeria Holdings, Wema Bank and Jaiz Bank have proposed Rights Issues, while Fidelity Bank has announced plans to raise additional capital via the issuance of 13,200 billion ordinary shares via public offer and rights issue. It was gathered that Wema Bank would commence its Rights Issue on December 1.

Already, players in the capital market have expressed varied views as to the capability of the market to support the proposed recapitalisation drive.

While the doyen of the Nigerian Exchange Limited, Rasheed Yusuf, in his comments, believed the local bourse could support such a major capital raise, even without the presence of foreign investors, the Managing Director of Afrinvest Securities Limited, Ayodeji Ebo, expressed doubts the capital market could support the recapitalisation.

He said, “The Nigerian capital market may not be able to fully support the recapitalisation of the banks given the market is currently been driven by domestic investors. To also achieve this, the banks must adopt technology to drive the capital raise process as we saw during the MTN public offer.

Ebo added, “We believe if the foreign exchange policy is clear and consistent in the medium term, we expect to begin to attract FPIs to the capital market.”

Meanwhile, some minority shareholders community have expressed the conditions under which they will support the financial institutions. Mr Boniface Okezie of the Progressive Shareholders Association of Nigeria, said that minority investors must do their due diligence and invest in stocks with track records.

“What we will be looking out for include those who have been paying dividends in the past, those with good capital appreciation and a good track record from their management team. How have they been communicating with shareholders when the situation was rosy or not? I have my fears and some of those banks can’t convince me, not when my money has been trapped. In the past, they have been reckless. Even those who acquired the shares of those banks did not pay compensation to shareholders and are using the assets of the bank as leverage to build up their branches. They are not paying dividends to shareholders but have created an empire. For such banks, shareholders must be on the lookout for them and this is the time to pay them back in their coins, “he said.

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Breaking : 176 Woro Abductees, 132 Others Freed in Major Multi-State Rescue Operation

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A total of 308 kidnapped victims, including 176 residents of Woro community in Kwara State and 132 others abducted in Niger and Kebbi states, have been rescued in a coordinated multi-state security operation.

The successful operation, carried out by security agencies, marks a significant breakthrough in ongoing efforts to combat kidnapping and restore peace across the affected communities. Authorities said the rescued victims have been reunited with their families, while efforts are underway to apprehend the perpetrators and dismantle the criminal networks responsible for the abductions.

The rescue underscores the commitment of security agencies to strengthening intelligence-driven operations and ensuring the safety of lives and property across the country. Further details on the operation and ongoing investigations are expected from the relevant authorities.

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Dangote Reduces Petrol Price to ₦1,165, Diesel Drops to ₦1,570

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The Dangote Petroleum Refinery says it has reduced the ex-depot prices of Premium Motor Spirit (petrol) and Automotive Gas Oil (diesel) as part of efforts to make petroleum products more affordable.

Under the new pricing structure, the refinery reduced the price of petrol from N1,215 per litre to N1,165, representing a N50 reduction, while diesel was cut from N1,650 per litre to N1,570, amounting to an N80 reduction.

In a statement signed by the Dangote Group on Wednesday, the refinery said the price review was aimed at enhancing energy affordability, improving access to refined petroleum products and supporting economic activities across Nigeria.

According to the refinery, the move reflects its commitment to providing “affordable, high-quality petroleum products to the Nigerian market.”

It added that it remained committed to ensuring stable supply while leveraging operational efficiencies to deliver value to consumers, businesses, and stakeholders.

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The company said it would continue to pass on the benefits of improved operational efficiencies to consumers whenever market conditions permit.

It stated that the refinery continues to play a pivotal role in strengthening Nigeria’s energy security, reducing reliance on imports, and supporting the nation’s economic development through the supply of world-class petroleum products.

“Dangote Petroleum Refinery has announced a reduction in the ex-depot prices of Premium Motor Spirit (PMS) and Automotive Gas Oil (Diesel), reaffirming its commitment to providing affordable, high-quality petroleum products to the Nigerian market.

“Under the new pricing structure, the refinery has reduced the ex-depot price of PMS to N1,165 per litre, down from N1,215 per litre, representing a reduction of N50 per litre. Similarly, the ex-depot price of Diesel has been reduced to N1,570 per litre from N1,650 per litre, amounting to a decrease of N80 per litre.

“The price review reflects Dangote Refinery’s ongoing efforts to enhance energy affordability, improve access to refined petroleum products, and support economic activities across Nigeria,” the statement read partly.

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National Policing Bill Set for Seven-Week Implementation Plan, Says Gbajabiamila

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•Working group opens portal for public input • ‘It is Tinubu’s most consequential reforms’

The process leading to the creation of state police has been fast-tracked.

A seven-week roadmap for the National Policing Bill commenced on July 27 and is expected to be completed on September 14.

Chairman of the Presidential Working Group on the National Policing Bill, Mr Femi Gbajabiamila, unveiled the action plan yesterday after the group’s meeting.

He said the seven-week work programme would proceed through simultaneous legal drafting, policy research, data analysis and implementation modelling.

Gbajabiamila added that the final submission would include schedules, an explanatory memorandum, a legal audit, a consequential amendments matrix, clause-by-clause analysis, a state readiness framework, fiscal and implementation notes, a validation report, a risk register and a digital archive.

The Chief of Staff reiterated the Federal Government’s commitment to decentralised policing that would not undermine national unity or the rule of law.

He said: “State police cannot mean 36 state militias,” adding that while states must have a legitimate role in public safety, “no political office holder should be able to direct the arrest of an opponent, the suppression of lawful political activity, or the selective enforcement of the law.”

Gbajabiamila explained that federal intervention would remain “exceptional, evidence-based, proportionate, time-limited and reviewable”, while officers would remain accountable to the Constitution rather than political interests.

He said no state would be permitted to commence policing operations until it demonstrated readiness in recruitment, training, equipment, pensions, complaints handling, financial sustainability, firearms control and independent oversight.

Gbajabiamila added: “Operational commencement must be based on readiness, not announcement. Although states could exceed national benchmarks, no Nigerian should receive a lower standard of protection because of where they reside.”

To encourage public participation, the Chief of Staff called for memoranda and position papers from Nigerians, civil society organisations, professional bodies, security institutions and other stakeholders.

He said a dedicated portal, nationalpolicingbill.com, had gone live to receive submissions, with plans to migrate it to a government domain.

On the financial implications of the reform, Gbajabiamila said it was premature to estimate the cost, noting that expenditure would be determined through empirical research conducted on a state-by-state basis.

He dismissed fears that some states might lack the capacity to establish police services.

However, Gbajabiamila explained that where a state is genuinely unable to meet the prescribed standards, the Nigeria Police Force would continue to provide policing services until the state becomes operational.

Gbajabiamila said the committee is expected to submit an Executive Bill to President Bola Ahmed Tinubu on September 3.

He said the package would go beyond draft legislation, adding that it would also provide the implementation blueprint required to operationalise a dual federal-state policing architecture once the constitutional amendment creating state police comes into force.

Hailing the initiative, Ogun State Governor Dapo Abiodun described the National Policing Bill as one of President Tinubu’s most consequential reforms.

Also assuring Nigerians of the prospects of the initiative, the Attorney-General of the Federation and Minister of Justice, Prince Lateef Fagbemi (SAN), said the enforcement of national standards would prevent abuse of state police and protect citizens.

Explaining further, Gbajabiamila said that following the completion of the draft, nationwide consultations would be held before the President grants final approval, after which the executive bill would be transmitted to the National Assembly.

He said: “The resulting draft executive bill package is scheduled for presentation to the President on the 3rd of September.

“We have tweaked the process so that the national consultation will come before the President’s final approval, after which the text and supporting materials will be revised and prepared for formal transmission to the National Assembly.”

He stressed that despite the progress made by the National Assembly, no state police service currently exists in Nigeria because the constitutional amendment has not yet secured the approval of the required number of state Houses of Assembly.

He said that while the constitutional amendment would create the legal authority for state policing, it would not by itself resolve critical operational issues such as recruitment, training, funding, command structures, jurisdiction, pensions, firearms regulation, data management, complaints mechanisms and inter-agency cooperation.

Gbajabiamila explained that those issues would be addressed in the National Policing Bill and other consequential legislation being prepared by the working group.

Gbajabiamila said the assignment also includes a review of the Police Act 2020, the Police Service Commission framework, police regulations and other laws affected by the reform, alongside provisions for minimum national policing standards, state certification, interstate cooperation, independent complaints institutions, human rights safeguards, forensic systems, funding arrangements and transition plans.

He said President Tinubu had approved a multidisciplinary Policy Advisory Committee, chaired by Justice Mohammed Abdullahi Liman, to provide technical oversight and validate the bill, fiscal framework and implementation materials before executive consideration.

He said the committee would draw its membership from the judiciary, academia, security agencies, the National Assembly, the Office of the National Security Adviser, the Nigeria Police Force, the Nigerian Bar Association, the Nigeria Governors’ Forum and state Attorneys-General representing the six geopolitical zones. NigerianBusiness Coverage

Abiodun described the National Policing Bill as one of the most consequential reforms of the Tinubu administration, saying the legislation would provide the legal and operational framework needed to translate the constitutional amendment into a workable policing system.

Abiodun, who represents the Nigeria Governors’ Forum (NGF) on the Presidential Working Group on the National Policing Bill, told reporters that the bill would address critical issues, including the jurisdiction of federal and state police, funding arrangements, recruitment, start-up grants for states and amendments to existing laws affected by the reform.

He noted that many Nigerians had assumed that states would immediately establish police services once the National Assembly approved the constitutional amendment, explaining that the current assignment of the working group is to produce the detailed implementation framework that would make the reform operational. NigerianBusiness Coverage

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Abiodun said: “What we’ve seen and witnessed is the amendment of the Constitution, and we’ve seen a groundswell of support by the entirety of Nigerians with a very high level of expectation that once the amendment was completed by the National Assembly, the next thing is for states to begin to implement their various state policing systems.

“The truth is that what this working group is working on is what would allow for the details of that implementation, which will be reflected in the bill.”

Abiodun dismissed insinuations that the Federal Government was attempting to retain control over state policing through the proposed legislation, insisting that the bill was intended only to translate the constitutional amendment into an effective and workable legal framework.

He said: “Someone has to be responsible for ensuring that the amendment now reflects in a bill that can be operated, and that’s what we’re working on.”

The governor explained that the legislation would also make consequential amendments to other existing laws, including the Firearms Act, while clearly defining the responsibilities of both federal and state police services.

He urged Nigerians to actively participate in shaping the proposed legislation through the newly launched public engagement portal, nationalpolicingbill.com, describing it as an interactive platform designed to give citizens a sense of ownership of the reform. NigerianBusiness Coverage

Fagbemi said the primary objective of the proposed legislation was to strengthen the protection of lives and property while ensuring that state police never become instruments of political persecution.

He explained that where any state is not yet prepared to establish its own police service, the Nigeria Police Force would continue to provide policing until such capacity is developed.

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Fagbemi said: “Law abhors a vacuum, so the federal presence will continue to dominate in that area.”

The minister defended the proposed minimum national policing standards, saying they were essential to guarantee equal protection for Nigerians irrespective of where they reside. NigerianBusiness Coverage

He said: “The main thrust of this bill is to ensure security of lives and property, and it is also important that we do not make state policing a weapon of political persecution or oppression.

“There must be standards. There must be the minimum threshold to guarantee the continued existence and operation of society.”

The minister said the standards would be aligned with globally recognised policing practices, assuring that officers moving between the federal and state police services would not lose their benefits.

Other members of the Presidential Working Group at the briefing included the Inspector-General of Police, Tunji Disu; NBA President Afam Osigwe (SAN); Chairman of the Policy Advisory Committee, Justice Abdullahi Liman; and Senior Special Assistant to the President on Planning and Research, Nnadubem Moghalu.

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