Nigeria: SEC Guidelines Enhance Transparency in Banks’ Recapitalisation – DG

Dr. Emomotimi Agama, Director-General of the Securities and Exchange Commission (SEC), has emphasized that the guidelines issued by the commission prior to the recent banking recapitalisation exercise played a critical role in increasing transparency and facilitating greater public participation in the process.

Speaking in a statement released by the SEC on Sunday, Agama explained that the recapitalisation was a key initiative by the government aimed at fortifying the banking sector.

Earlier this year, in March, the Central Bank of Nigeria (CBN) introduced new capital requirements for banks to strengthen financial institutions, in line with President Bola Tinubu’s goal of achieving a $1 trillion economy. The CBN urged Deposit Money Banks (DMBs) to take swift action to increase their capital base, fortifying the financial system against potential risks.

In response to the CBN directive, the SEC introduced a framework to support the banks’ capital-raising efforts. As a result, banks are currently raising funds through the capital market and other channels to meet the new capital requirements.

Highlighting the commission’s role, Agama noted, “The SEC provided clarity ahead of the recapitalisation exercise because the current management prioritizes integrity and transparency in all processes.” He added that the regulations introduced by the SEC were essential for ensuring that the recapitalisation was conducted in a structured and transparent manner.

“These guidelines were crucial in strengthening banks and providing them with the capacity to lend to the real sector, supporting the broader economic goals outlined in the Renewed Hope Agenda and President Tinubu’s vision for a $1 trillion economy,” Agama stated.

He also underscored the importance of collaboration among relevant institutions to ensure the recapitalisation process proceeded smoothly. Reflecting on the SEC’s experience, Agama recalled the commission’s successful handling of the 2004 Soludo-led recapitalisation exercise, expressing confidence that the current effort would be equally successful.

“This is the second major recapitalisation test for the SEC, following the 2004 exercise, and we are confident that the outcome will be positive once again. We have learned valuable lessons from the previous experience, and those lessons have informed the creation of a more seamless environment, aided by updated guidelines and the use of new technology,”he said.

Agama noted that the SEC’s actions have brought about stability and transparency to the recapitalisation process, resulting in an increase in public offerings and heightened investor interest. “We are pleased with the progress made so far and will continue to support the CBN and other institutions that recognize the importance of the capital market in driving economic growth,” he added.

The SEC DG emphasized the importance of a robust capital market, stating, “The capital market is the barometer of the economy, and at this critical moment, the SEC is committed to ensuring a sustainable industry for the future.”

Agama further disclosed that the commission is collaborating with key institutions, including the Central Bank of Nigeria, the Federal Inland Revenue Service, and the Office of the National Security Adviser, to create a secure and conducive environment for investments. This collaboration particularly aims to attract the younger generation to participate in the capital market.