The Group Managing Director of Cowry Assets Management Limited, Johnson Chukwu, has urged the Central Bank of Nigeria to deploy available technology and Bank Verification Numbers to speed up the process of verifying offers in the ongoing recapitalisation exercise.
Chukwu made the call on Saturday at the yearly workshop of the Capital Market Correspondents Association of Nigeria with the theme: ‘Banks’ Recapitalisation: Bridging the Gap Between Investors and Issuers in the Nigerian Capital Market’ held in Lagos.
Following the recapitalisation directive of the CBN, some banks raised funds from the capital market via public offers and rights issues; however, none of the offers have been concluded months later due to the verification exercise of the apex regulator.
Disturbed by the delay, Chukwu said there was technology available that could speed up the process that could be adopted by the CBN.
Chukwu said the deployment of tech and the use of the BVN would fast-track the process of accepting or rejecting offers and enable investors to get their allotment or deploy their funds in other profitable economic activities.
He argued that while the apex bank’s role in verifying the source of the capital invested is important, the longer period for completion of the verification process is dampening investors’ confidence.
According to him, this is particularly worrisome for investors whose funds may be returned where the offers may be oversubscribed, given the missed reinvestment opportunities.
Chukwu also stated that the current CBN requirements for investors investing in bank shares are seen by many as overly stringent and creating barriers for both issuers and investors.
He cited the provision of three-year audited financial statements, a board resolution authorising the investment, and tax clearance certificates for the past three years for corporate investors, noting that these requirements are a disincentive to investment in the capital market.
Chukwu also described banks’ recapitalisation as a key strategy for strengthening the Nigerian banking sector and fostering economic growth.
He, however, argued that the success of these efforts hinges on effectively bridging the gap between investors and issuers in the capital market.
Outlining the role of the capital market in the recapitalisation exercise, Chukwu noted that when banks access the capital market and demonstrate their ability to raise capital through successful IPOs, rights issues, and bonds, it strengthens investors’ confidence and sends a positive signal to the broader financial market.
Chukwu also urged the CBN and other regulatory bodies to work together to create a more predictable regulatory environment for banks and investors.
“The frequency of regulatory policy changes needs to be moderated to allow for better planning for both banks and the investing public as well as reduce the regulatory and operational risks associated with these frequent changes.
“Banks must commit to improving their transparency and disclosure standards. This includes the publication of detailed and accurate financial statements, risk disclosures, and forward-looking guidance. By addressing the challenges of information asymmetry, regulatory uncertainty, and liquidity, while improving transparency, corporate governance, and financial innovation, the Nigerian capital market can unlock new opportunities for bank recapitalisation,” he asserted.
