Following a recent disclosure that some three banks will need to raise their capital base in the first quarter of 2016, there are indications that some of the banks may opt for a merger or outright acquisition to stay afloat.
The development has now raised fears in the banking and finance sector over job losses as a fallout of the perceived capital base inadequacy problem.
There is also heightened speculation that no less than six commercial banks are in dire need of recapitalisation and would likely merge to stay in business by 2016.
Managing Director, Sterling Bank Plc, Yemi Adeola, who dropped a hint last week, said he envisaged possible shrinking in the number of local banks in the New Year, adding that there are already moves suggesting that trend, but he did not name any bank.
The fears over fresh liquidity surrounding some of the local banks might not be unfounded if the crashing price of crude oil to as low as $38.11 per barrel from over $110 per barrel a year ago, is to be taken into consideration. This singular factor has adversely affected banks’ oil assets.
This is not to mention the level of non-performing loans in the sector, which has risen tremendously in recent times.
However, this fear was dismissed by the Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, who said “there is no Nigerian bank that has capital adequacy problem today and all the news around that is false”.
“We stress-test banks’ balance sheet and profit loss accounts on a regular basis using different scenarios. That is what we do as a responsible central bank that monitors the strategic health of banks. We carry this exercise out as a practice and I hope this puts this matter to rest”, Mr. Emefiele said.