Stock market experts react to planned banks’ recapitalisation

“The CBN, Securities and Exchange Commission and the NGX should collaborate and put a workable plan in place that is fair to all."

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Stock market, experts react, CBN banks’ recapitalisation
Nigeria Stock Exchange

Some stock market experts have expressed optimism that the primary market segment of the nation’s stock market will witness increased activity with the planned recapitalisation of banks by the Central Bank of Nigeria (CBN).

They spoke on Monday in Lagos, against the CBN pronouncement that it was planning to implement a new round of banking recapitalisation in line with the anticipated N1 trillion dollars economy by 2030.

Prof. Uche Uwaleke, the President, Association of Capital Market Academics of Nigeria, said the stock market would likely witness increased primary market activities.

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Uwaleke said the primary market segment would witness increased activity in view of the fact that some of the banks may seek to recapitalise via offer for subscription of shares.

“The role of the regulators is to ensure that the time-to-market for these banks is significantly reduced to enable the process be concluded in good time.

“The Nigerian Exchange (NGX) in particular can equally look into listing for non-listed banks to eventually list and do an Initial Public Offer.

“Also, if the experience of 2005 is any guide, the recapitalisation exercise is likely to rejuvenate the stock market,” Uwaleke said.

Also speaking, Mr Moses Igbrude, the National-Coordinator, Independent Shareholders Association of Nigeria, said the proposed recapitalisation policy would bring a lot of activities into the capital market and financial sector of the economy.

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Igbrude, however, stressed the need for players to use lessons learnt from the last recapitalisation to avoid pitfalls.

He said, “To enhance its effectiveness, there’s need for players to use lessons learnt from the last recapitalisation in order to avoid the pitfall of the last exercise.

“The CBN, Securities and Exchange Commission and the NGX should collaborate and put a workable plan in place that is fair to all.

“The cost of raising capital should be fair and be what players can afford, and operators should not delay or waste time before it is too late,” Igbrude added.