CBN insists on banking consolidation for national benefit

At the launch of Dr. Ray Echebiri’s book, “Power of One Man,” held at the weekend, the Central Bank of Nigeria (CBN) reiterated the necessity of further capitalization of banks in the country, emphasizing its critical role in enhancing national stability and growth.

Representing CBN Governor Dr. Olayemi Cardoso at the event, Mr. Philip Ikeazor, Deputy Governor of the Financial System Stability Directorate, underscored the rationale behind the ongoing banking consolidation initiative.

He pointed out the similarities between the current exercise and the previous one led by Professor Soludo, aimed at fortifying banks to support economic expansion.

“The current manifesto of the Central Bank has embarked on another round of banking consolidation. Why was it necessary then? Professor Soludo wanted to make the banks robust, resilient, and fit for purpose to grow the economy. And that is exactly the same reason we are embarking on a similar journey today,” stated Ikeazor.

He highlighted the macroeconomic factors influencing the decision, including the unification of FX rates and the removal of fuel subsidies, which have started manifesting impacts on the economy.

The goal is to ensure banks are adequately capitalized to withstand economic shocks and foster growth.

Reflecting on the historical significance of the 2004 banking reforms, former President Olusegun Obasanjo, represented by former Cross River State governor Donald Duke, acknowledged the disruptive change brought about by the recapitalization from N20 billion to N250 billion. This move, according to Obasanjo, transformed the Nigerian banking and financial landscape permanently.

Governor Babajide Sanwo-Olu of Lagos State also commended the enduring impact of Soludo’s team in navigating challenges during the reforms. He noted the parallels between past and present efforts in banking consolidation, stressing the importance of resilience and strategic planning.

The ongoing efforts by the CBN aim not only to strengthen the financial sector but also to support Nigeria’s economic development agenda.

As the nation navigates through current economic challenges, the role of robust financial institutions becomes increasingly pivotal in sustaining stability and fostering inclusive growth.

The event brought together eminent Nigerians, economists, bankers, opinion leaders, businessmen, and politicians to reflect on past achievements and chart a course for future economic resilience and prosperity.

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