Analysts fear bank recapitalisation may worsen SMEs’ funding
CHIGOZIE AMADI
Analysts have stated that the ongoing recapitalisation in the banking sector was pushing the industry towards greater consolidation, with significant implications for lending practices, especially for small and medium-sized enterprises.
They also stated that the Central Bank of Nigeria’s directive for banks to increase their capital base was not only reshaping the landscape by encouraging mergers among smaller banks but also raising concerns about restricted access to credit.
According to the Head of Research at FMDQ Group, Vincent Nwani, the recapitalisation was likely to lead to a wave of mergers and acquisitions, as smaller banks may find it difficult to meet the stringent capital requirements on their own.
“The recapitalisation will undoubtedly lead to further consolidation in the banking sector.
“Smaller banks may struggle to meet the new requirements independently, prompting more mergers and acquisitions. This consolidation is likely to create a more competitive environment but may limit credit access for smaller enterprises,” Nwani explained.
Meanwhile, a Professor of Economics at Babcock University, Olusegun Ajibola, warned that while the recapitalisation might strengthen the overall banking sector, it could also result in tighter lending conditions, particularly for SMEs.
He noted that banks, in their effort to meet the new capital requirements, might prioritise capital accumulation over lending, which could temporarily reduce the availability of credit for SMEs.
“While the recapitalisation will strengthen the banking sector, the immediate effect will be a tightening of lending, particularly to small and medium-sized enterprises.
“Banks are focused on shoring up their capital, which could temporarily crowd out credit availability for SMEs, crucial to our economy,” the former president of the Chartered Institute of Banking of Nigeria noted.
The PUNCH reports that the Association of Securities Dealing Houses of Nigeria has accused banks of bypassing licensed stockbrokers as receiving agents in the fresh recapitalisation exercise.
The Chairman of ASHON, Sam Onukwue, and its Secretary, Athan Ogbozor, stated that the association was empowering their staff members, including drivers and receptionists, to issue and receive share subscription forms.
