The Central Bank of Nigeria has said that more than 80 per cent of banks in the country have the Basel II capital adequacy requirement even as it defended its recent circular on restrictions on dividend payout by banks.
CBN’s deputy director, Banking Supervision Department, Kevin Ibedo noted that most banks have complied with the Basel II requirement, stating that over 80 per cent of banks which submitted their Internal Capital Adequacy (ICAP) have complied.
Explaining the rationale behind the recent circular of the apex bank, which restricted banks without enough capital from paying dividend, Ibedo said “we are saying rather than spend all your money today, make profit and have retained earnings share a little and beef up your capital so that they can meet up with the Basel II capital.”
“We did a survey and discovered that banks do not have adequate capital. There is a requirement called ICAP which they submit to us, we have been reviewing their reports so based on it we moved the deadline to October,” said Ibedo.
“So we are reviewing the capital raising and that is the reason we raised the circular.“What we review is their dividend policy whether it is realistic and as regulators we want to ensure that the banks in their dividend policy make effort to retain some of their profit.”
However, the national coordinator of the Independent Shareholders Association, Sunny Nwosu, called on bank directors as well as the CBN to review the circular so that investors in the banking industry can have returns on their investments.
