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  • Eight banks meet N500bn recapitalisation target ahead of deadline — CBN

    Eight banks meet N500bn recapitalisation target ahead of deadline — CBN

    Eight commercial banks have successfully met the Central Bank of Nigeria’s (CBN) N500 billion recapitalisation requirement ahead of the March 2026 deadline, the apex bank confirmed on Tuesday.

    Speaking at a press briefing in Abuja after the two-day Monetary Policy Committee (MPC) meeting, the Governor of the CBN, Olayemi Cardoso, disclosed that several banks had made significant progress in strengthening their capital base to align with the new regulatory threshold.

    “The MPC noted that eight banks have fully met the recapitalisation requirements, while others are making progress towards meeting the deadline,” Cardoso announced.

    The CBN launched the current banking sector recapitalisation programme in March 2024 to increase the minimum capital base of commercial banks to N500 billion. The policy, according to the apex bank, is designed to ensure financial system stability, strengthen banks’ capacity to finance large-scale economic projects, and align with global standards of risk-based supervision.

    Cardoso explained that the ongoing recapitalisation initiative is helping to reinforce the sector’s resilience, with key Financial Soundness Indicators (FSIs) showing sustained stability.

    The Committee decided to retain all monetary policy parameters to consolidate the recent gains in inflation control and price stability. The benchmark Monetary Policy Rate (MPR) remains at 27.50 percent, with an asymmetric corridor of +500/-100 basis points. The Cash Reserve Ratio (CRR) was maintained at 50.00 percent for deposit money banks and 16.00 percent for merchant banks. The Liquidity Ratio was also held steady at 30.00 percent .

    This decision, the CBN Governor said, was taken to “sustain the momentum of disinflation and sufficiently contain price pressures,” noting that Nigeria has begun recording gradual improvement in inflation dynamics.

    “We will continue to use every tool available—MPR, CRR, and ensuring an efficient foreign exchange market—to bring down inflation to significant levels,” he said.

    Cardoso stated that managing inflation expectations remains a key focus for the Bank, and transparency in policy direction will help guide public and investor sentiment.

    “We are determined to ensure that we use all the different tools at our disposal. Inflation expectations will be managed in a way that the public understands the direction of policy. We are committed to transparency,” he said.

    The MPC noted improving conditions in the foreign exchange market, buoyed by increased capital inflows, a rise in non-oil exports, a rebound in crude oil production, and reduced import volumes.

    CBN Governor Olayemi Cardoso disclosed that Nigeria’s external reserves had risen to $40.11 billion as of July 18, 2025, which equates to approximately 9.5 months of import cover for goods. This development, he said, reflects growing confidence in the economy and improved forex liquidity conditions.

    He also acknowledged that the spread between the official and parallel market exchange rates has narrowed significantly, with several banks now permitting the use of naira debit cards abroad — a development that marks a return to normalcy and reflects improvements in market confidence.

    “The differences that we had between the current market rate and the official rate, you can all see it yourselves. Some of the banks are now allowing you to use your Naira card when you travel. Those things are here to stay. They are not a short-term measure,” he said.

    Cardoso noted that these positive developments are a result of ongoing reforms aimed at improving transparency, rebuilding trust, and attracting foreign investment.

    “A lot of what you see going on now is transformational, and they are here to stay,” he remarked.

    The MPC welcomed recent economic performance figures, particularly the 3.13 percent growth in real Gross Domestic Product (GDP) recorded in the first quarter of 2025. This, Cardoso noted, compares favourably with 2.27 percent recorded in Q1 2024 and 3.38 percent in the preceding quarter of Q4 2024.

    In addition, the latest data from the Purchasing Managers Index (PMI) indicate that the economy is on an expansionary path, pointing to positive business sentiment and increased output in the non-oil sector.

    “The Nigerian economy remains on an expansionary path, and we are confident that the reforms implemented so far will continue to yield positive outcomes,” the Governor said.

    On food security, the MPC commended the Federal Government’s ongoing efforts to improve security across farming communities, which has contributed to increased agricultural activity. Members also encouraged further support through timely access to high-yield seedlings, fertilisers, and other critical inputs during the current farming season.

    Food inflation has been one of the key drivers of headline inflation in recent months. The CBN said it has worked closely with other agencies to address underlying supply constraints while managing monetary factors through its policy instruments.

    Cardoso reiterated the importance of consistent policy implementation and cross-sectoral collaboration to ensure a stable macroeconomic environment that can attract investment.

    “We have to be consistent in all our policies, build trust, and create an enabling environment for investment—both foreign and domestic,” he said. “Nobody wants to invest where there is policy uncertainty. Our goal is to reduce that uncertainty and provide a stable and predictable investment climate.”

    The Governor noted that international institutions such as the IMF and other development partners have taken note of Nigeria’s recent economic progress, describing the signs as positive and encouraging for sustained recovery.

    The Central Bank signalled its intention to continue adopting a data-driven approach in assessing inflation trends, economic performance, and global developments to inform future policy decisions. 

    The recapitalisation of the banking sector is expected to further strengthen the financial system’s capacity to support large-scale private sector-led investments and industrialisation.

  • Recapitalisation: Banks’ insiders bid for higher stakes

    Recapitalisation: Banks’ insiders bid for higher stakes

    Major insiders and directors have launched subtle moves to secure higher stakes in banks as the recapitalisation process gathers momentum.

    Trading reports at the Nigerian Stock market have shown a surge in insiders’ transactions with most deals concentrated on banking stocks.

    Regulatory reports by the Nigerian Exchange (NGX) at the weekend showed that two-thirds of companies that reported insiders’ acquisition of shares last week were banks, which accounted for the largest volume and value of insiders’ transactions. This was consistent with similar trends in recent weeks.

    The banks’ shares were mostly being acquired by major shareholders, directors and senior management members and their relatives, who by virtue of their closeness to the banks, are classified as insiders under the extant rules at the capital market.

    All recent bank-related insider dealings were for purchase of shares, rather than sale, forming a pattern of transactions that targets some major commercial banks.

    Banks accounted for 66.7 per cent of total number of companies that recorded insiders’ dealings last week and half of the total number of reported deals.

    A four-week review also showed similar trend of spike in insiders’ transactions on banking stocks.

    Sources said major shareholders are taking preemptive moves in preparation for expected rights issues by banks.

    Rights issue is traditionally pre-allotted on the basis of existing shareholdings and in most instances, offered at discount to existing shareholders.

    A senior investment banker, who pleaded anonymity because of closeness to some transactions, said banks’ insiders were taking positions to benefit from the recapitalisation offers, through higher stakes or a tradeoff of the discounts on their rights.

    Extant rules allow shareholders with pre-allotted rights to trade such rights at the prevailing market prices at the secondary market.

    Rights issues feature prominently in the recapitalisation plans of the banks, with most analysts expecting existing shareholding structures to substantially determine the post-recapitalisation structure and control of several banks.

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    At the weekend, the Securities and Exchange Commission (SEC) Executive Commissioner (Operations), Mr. Bola Ajomale, said rights issues could account for a larger proportion of the more than N4 trillion new capital injection expected under the ongoing banking recapitalisation.

    “The capital raising might go through the right issues process. Out of the six capital raised in the market this year, four are right issues,” Ajomale said.

    NGX’s Acting Chief Executive Officer (CEO), Mr. Jude Chiemeka, noted that banks might show greater recourse to rights issue under the current recapitalisation.

    “Right issues are one of the preferred means by which they would be seeking new capital injection to fulfill the apex bank’s requirement,” Chiemeka said.

  • Investors target banks’ shares on earnings, recapitalisation’s push

    Investors target banks’ shares on earnings, recapitalisation’s push

    • Banking stocks lead equities to N811b rebound
    • Robust earnings raise hope

    There are indications that investors are taking up positions in banking stocks ahead of the full rollout of the recapitalisation plans of banks.

    A major rally across the banking sector led the stock market at the weekend to its most significant rebound in recent period.

    With average gain in the banking sector more than six times that of the overall market, Nigerian equities closed weekend with net capital gain of N811 billion, the market’s first major gain in recent weeks.

    After a streak of losses, Nigerian equities closed weekend average gain of 1.46 per cent, pushing the year-to-date return to 33.18 per cent. Banking stocks were largely responsible for the recovery.

    All sectoral indices had closed negative with the exception of the financial services’ sector’s indices. NGX Banking Index led the rally with average gain of 9.42 per cent during the week. The NGX Insurance Index inched up by 0.98 per cent. The NGX Pension Index, which has a substantial component of the banking sector, returned 6.15 per cent. The NGX 30 Index, which tracks the 30 largest stocks at the Nigerian Exchange (NGX), including several banking stocks, posted average gain of 1.54 per cent.

    However, other indices closed negative. The NGX Oil and Gas Index recorded average loss of 0.68 per cent. The NGX Industrial Goods Index dropped by 0.36 per cent while the NGX Consumer Goods Index declined by 0.26 per cent.

    The benchmark index for the Nigerian equities market, the All Share Index (ASI) – a common, value-based index that tracks all share prices at the NGX, closed weekend at 99,587.25 points as against its week’s opening index of 98,152.91 points.

    Aggregate market value of quoted equities rose simultaneously from its opening value of N55.512 trillion to close weekend at N56.323 trillion, an increase of N811 billion.

    Banks had last week submitted their recapitalisation plans to the Central Bank of Nigeria (CBN). The plans included step-by-step activities, transactional details, instruments and other options for their recapitalisation. The apex bank had set a deadline of April 30, 2024 for the submission of the plans.The plans covered the two-year compliance period ending March 31, 2026.

    The CBN recapitalisation framework gives banks three broad options of injection of new equity capital, mergers and acquisitions and upgrade or downgrade of licence authorisation.

    In the ongoing recapitalisation, CBN uses a distinctive definition of the new minimum capital base for each category of banks as the addition of share capital and share premium, as against the previous use of shareholders’ funds. While several banks have shareholders’ funds in excess of the new minimum capital base, their share premium and share capital significantly fall short of the new minimum definition.

    The rally also came in the thick of the submission of the first quarter earnings, with the three-month reports showing banks with significant growths.

    Experts agreed that the recapitalisation drive and first quarter earnings were the underlying sentiments for the banking sector’s performance at the stock market.

    Managing Director, Arthur Steven Asset Management, Mr Olatunde Amolegbe, said the first quarter earnings of banks have been generally impressive.

    According to him, the recent depreciation in share prices and the quantum leap showed by the first quarter results have created substantial value in banking stocks.

    “The first quarter earnings reports have been very impressive. For instance, the earnings per share of Access Holdings is about N17 while the share price is at about the same level, so clearly they are undervalued. Also, there was bound to be a rebound given the depreciation banking stocks had seen in the last few weeks,” Amolegbe said.

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    Analysts at Cordros Capital said they expected investors “to adjust their portfolios based on assessment of first quarter 2024 corporate earnings reports”. They, however, cautioned that the prospect of higher fixed income yields could dampen buying interests, especially in the absence of any significant positive catalysts.

    There were 42 gainers to 36 losers last week as against 27 gainers and 43 losers recorded in the previous week. Banking stocks dominated the top gainers’ list, accounting for 40 per cent of the best-performing stocks. Banking stocks also accounted for nearly two-quarters of the total turnover at the market.

    FBN Holdings led the gainers with a gain of 32.68 per cent to close at N27. Sterling Financial Holdings Company followed with a gain of 27.75 per cent to close at N4.88 per share. Jaiz Bank rose by 16.34 per cent to close at N2.35 while United Bank for Africa (UBA) rallied 12.17 per cent to close at N25.80 per share.

    Other top gainers included UAC of Nigeria, which rose by 24.6 per cent to close at N15.45; Julius Berger Nigeria, which added 23.76 per cent to close at N72.40 and Flour Mills Nigeria, which rallied 20.66 per cent to close at N36.80 per share.

    Total turnover at the NGX rose to 1.941 billion shares worth N32.644 billion in 35,807 deals last week compared with 1.839 billion shares valued at N34.258 billion traded in 37,528 deals two weeks ago.

  • The new recapitalisation

    The new recapitalisation

    • It should not only be about size but overall impact on the economy

    Few Nigerians would be taken by surprise at the announcement of another cycle of bank recapitalisation vide the Central Bank of Nigeria (CBN) circular of March 28. This is because the CBN governor, Yemi Cardoso, had, in November 2023 at the 58th Annual Dinner of the Chartered Institute of Bankers of Nigeria spoken of its

    imminence. Alluding to his earlier speech at the 370th Bankers’ Committee Meeting, in which he drew attention of the members to the Tinubu administration’s ambitious goal of achieving a GDP of $1tn dollars over the next seven years, he had on the occasion given the hint: “Attaining this target necessitates sustainable and inclusive economic growth at a significantly higher pace than current levels. It is crucial to evaluate the adequacy of our banking industry to serve the envisioned larger economy. It is not just about its current stability. We need to ask ourselves, can Nigerian banks have sufficient capital relative to the finance system needs in servicing a $1tn economy in the near future? In my opinion, the answer is no, unless we take action.  As a first test, the Central Bank will be directing banks to increase their capital.”

    Well, that moment came last week.

    By the CBN circular dated March 28, the  minimum capital requirement for banks with international authorisation is now fixed at N500 billion; for commercial banks with national authorisation, it is now N200 billion and N50 billion for banks with regional authorisation. Also, merchant banks are mandated to have a minimum capital of N50 billion, while non-interest banks holding national and regional authorisation must have N20 billion and N10 billion, respectively.

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    A lot of course happened since the seismic recapitalisation of 2004 which shrank the nation’s banks from 84 to 25. In the last 20 years, the economy has certainly gone through cycles of booms

    and busts just as the banks’ operational environment has become even more dynamic and complex. And while the jury might seem yet out on the overall performance of the sector in all of these years, the issue of capital adequacy, particularly in the context of the shrunken value of the national currency has become pertinent. President Tinubu’s ambitious target of GDP of $1tn dollars over the next seven years may have only made the latest round of recapitalisation something of a déjà vu.

    However, unlike the 2004 which decreed a uniform capitalisation of N25 billion for all, this time the banks have a choice in terms of where to play – whether national, regional or international as the case may be – should things get to that.

    Of course, the point bears stating that recapitalisation is only a means to an end. Surely, if there are lessons to take from the 2004 exercise, it is that it guarantees nothing in terms of adherence to professionalism, not to talk of global best practices beyond the factor of size. In fact, the era seemed to have birthed its own demons in the craven abuse of credit guidelines, toxic loans, and insider trading, among such other varied abuses that not only turned the exercise into a farce but threatened to ruin the industry’s delicate fabric. Sadder still, the outcome did little to restore the industry to its pristine role of financial inter-mediation.

    Remarkably, it took another industry-wide tide under the direction of Sanusi Lamido Sanusi – tagged sanitisation – to cleanse the Augean stable left in its wake.

    Of course, we expect that things would be different this time. Both the CBN and the Securities and Exchange Commission must ensure that actors not only play by the rules but are seen to be so. And much as we agree that the presence of good and healthy banks is good for the economy, their relevance in the long run would be measured not so much about their fat bottom-lines but their impact in promoting overall health of the economy.       

  • Recapitalisation

    Recapitalisation

    • Questions the CBN must address

    To operators in Nigeria’s financial services landscape, recapitalisation is a familiar phenomenon. Thanks to the Chukwuma Soludo-era at the apex bank, Nigerians would readily recall how banks – 89 of them in all – were given 18 months to shore up their capital base from N2 billion to N25 billion or close shop. 

    As if bent on re-staging an old play, another era of recapitalisation beckons. And whereas the terrain may have changed considerably, the same broad rationale is being pressed into play. 

    Consider what Soludo said of the imperative in 2004: “We have 89 banks with many banks having capital base of less than US$ 10 million, and about 3,300 branches. Compare this to eight banks in South Korea with about 4,500 branches or the one bank in South Africa with larger assets than all our 89 banks. The truth is that the Nigerian banking system remains very marginal relative to its potential and in comparison to other countries—even in Africa”.

    That was about 19 years ago. In the end, only 24 of the banks survived.

    Talk of the wheels turning full cycle. Penultimate Friday, Yemi Cardoso, the helmsman of the Central Bank of Nigeria (CBN) in his keynote address at the Bankers’ Dinner had raised basically the same posers, benchmarked this time around, against President Bola Tinubu’s declared goal of achieving a Gross Domestic Product (GDP) of $1tn over the next seven years:

    “Considering the policy imperatives and the projected economic growth, it is crucial for us to evaluate the adequacy of our banking industry to serve the envisioned larger economy. It is not just about its current stability. We need to ask ourselves, can Nigerian banks have sufficient capital relative to the finance system needs in servicing a $1tn economy shortly? In my opinion, the answer is no, unless we take action. As a first test, the central bank will be directing banks to increase their capital.”

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    Nothing wrong, we daresay, with identifying and possibly, running with the president’s vision. Call the quest aspirational– something that the banks, as strategic partners, should be only too willing to embrace. Even at that, the CBN has merely signalled the direction; nothing as yet has been suggested as to the final destination. This is where the CBN, in our view, still has a lot of thinking and consultations to do. 

    Why what appears to be a regulatory fiat? Why not encourage the banks to respond or grow organically if they must? 

    And what form and shape would the recapitalisation take – would the banks still be categorised along the current lines of regional, national and global players? Will it be a case of the bigger being seen as ultimately better? And if the experiences of 2004/6 and its aftermath are anything to go by, can we expect the process, this time, to be less disruptive or chaotic? These and many more questions would obviously be needing answers in the coming days. 

    It bears stating also that some banks are already, far ahead of others in capitalisation. So, what would happen to those that fail to make the capital base to be proposed? Will they be subjected to forced mergers and/or acquisitions? In short, shouldn’t there be room for marginal players – lean but efficient lenders – in the financial services sector?

    While the CBN ponders on those issues, it should spare time to address issues of the pathetic state of infrastructure, high interest rate, the unending tales of wrongful/illegal debits of customer accounts and general lack of responsiveness that have long dogged the financial services sector – issues that have over time, received a less than proportionate attention. After all, one major takeaway from the last botched currency swap exercise is a sector hopelessly far behind in critical services infrastructure. 

  • Mutual assures shareholders on recapitalisation deadline

    The board of Directors of Mutual Benefits Assurance Plc has assured its shareholders that it will meet required capital base before the deadline set by National Insurance Commission (NAICOM), ahead of the June 2020 recapitalization deadline for insurance industry.

    The Chairman of the company, Dr. Akin Ogunbiyi gave this assurance during the company’s annual General meeting held in Lagos, that the board is determined to ensure that the company and it life subsidiary also meet the new capital requirement ahead of the June 2020.

    He said resolutions have been proposed to increase the authorised share capital from N10billion to N15billion and also to authorize the directors to raise additional capital for the company to ensure that the company  and her life subsidiary meets the requirement.

    On financial performance he said company recorded a net underwriting income of 13.9 billion for the year ended 31 December 2018. This represents a 19 per cent increase from the N11.77 billion recorded in 2017 for the Group.

    While gross premium written also grew by 13% from N14.03 billion in 2017 to N15.84 billion in the year under review. Net premium income stood at N13.47 billion representing an 18% increase from N11.46 billion in 2017, while profit after income tax stood at N1.149 billion; a 12% increase from 2017 figure of N1.02 billion.

    The 70% percent increase in claims paid over the 2017 figures impacted the company’s underwriting profit which dipped by 17% to N3.05 billion.

    The company paid claims amounting to N3 billion in the period under review. Motor claims were the highest, amounting to N1.10 billion, followed by fire which was N664 million, General Accident N330 million while Aviation risks attracted N441.90 million. Claims paid on other classes of business include Engineering N166 million; Oil and Gas risks N108.90 million and Marine N241.60 million.

    Speaking further on the claims he said “the claims paid shows our commitment to meeting our obligations to our esteemed customers.”

    According to him, the company has put in place systems and processes to ensure efficient claims service delivery.

    “We are committed to prompt settlement of all genuine claims, as this aligns with our mission statement of “Transcending the expectations of our customers for the satisfaction of their wealth protection needs through the provision of qualitative insurance and risk management services thereby creating values for all stakeholders.”

    “2019 is the third year of our five year strategy plan and we have made remarkable progress.  Our IT transformation will soon be completed which will take our service delivery level to greater heights with innovative customer centric solutions.”

  • NAICOM to insurers, reinsurers: submit your recapitalisation plans

    The National Insurance Commission (NAICOM) has directed insurance and reinsurance firms to submit their recapitalisation plans to the Commission by August 20.

    This is coming as the deadline for firms to meet up with the commission’s directive to increase their capital narrows from 13 months to nine months.

    In May, NAICOM increased the minimum paid-up share capital of a life insurance firm to N8 billion, non-life N10 billion and composite insurance firms N18 billion and re-insurance firms N20 billion, up from N2 billion, N3 billion, N5 billion and N10 billion.

    NAICOM, in the new circular to all firms dated July 23, entitled Re: Minimum Paid Up Share Capital Policy for Insurance and Reinsurance Companies, and signed by the Director, Policy & Regulation Directorate, NAICOM, Pius Agboola, stated: “Insurers and Reinsurers shall submit their recapitalisation plan to the Commission on or before 20th August, 2019.

    “The plan should include a capital status of the company based on the above-referenced circular as at the last audited financial statements; Board resolution on how to comply with the directives; and detailed action plan on how the funds for the recapitalisation are to be sourced with timelines and deliverables.

    “Also companies intending to seek funds from the capital markets are required to submit their plan of action on a file-and-use basis while companies that intend to merge or acquire another should submit their proposal after which they must comply with sections 30 and 31 of the Insurance Act 2003.’’

    It continued: “The commission shall review and provide responses on the submitted recapitalisation plans on or before September 17. The review may require meeting with the Board and Management of each of the insurance company on its recapitalisation plan.

    ‘’Similarly, the Commission is engaging with other regulatory bodies for possible palliatives in addition to those being considered by the Commission.’’

  • Recapitalisation: Regency shareholders offer dividends

    To recapitalize Regency Alliance Plc, its shareholders have urged the management of the company to retain the N200. 06 million dividends for the 2018 financial year.

    The shareholders made the offer during the company’s 25th Annual General Meeting (AGM) in Lagos.

    Its Chairman Ambassador Baba Gana Kingibe said to appreciate the shareholders, the board recommended the dividend payout, representing 3k per 50k share for shareholders for the financial year under review.

    But the shareholders suggested that the dividends should be ploughed into the business.

    Kingibe, however, disclosed that the gross premium production rose by 1.30 per cent from N3.368 billion in 2017 to N3.408 billion in 2018.

    He said: “The effect of increased premium generation was significantly eroded by the 24.30 per cent increase in net claims, 8.93 per cent increase in underwriting expenses and 3.94 per cent increase in management expenses compared with 2018 and 2017 figures.

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    “There was an increase of 24.37 per cent in the investment income of the company, which was reflective of the high deposit rates and government yield rates offered during the year. There was also an increase of 6.68 per cent in profit after tax from N196.475million in 2017 to N209.599million in 2018.

    “It is expected that our company, building on the gains of past financial discipline and strategic positioning, will continue to produce better results in the future. Total asset base of the company grew by 6.48 per cent from 7.345billion in 2017 to N7.821billion in 2018. This was due primarily to the effect of the foreign exchange translation loss arising from consolidating Regency Insurance Limited Ghana’s account. Total assets for our group and our company as at December 31, 2018 stood at N9.853billion and N7.821billion,” he said.

    After presenting the 2018 performance of the company, Ambassador Kingible announced his departure from the board. He expressed his gratitude to the company’s Board, management, staff and the shareholders for their support in the last nine years.

  • Lagos prepared for recapitalisation, says DG

    The Director-General, Lagos State Pension Commission (LASPEC), Mrs. Folashade Onanuga, has said the state is not worried over recaptalisation by insurance companies.

    According to her, the agreement between the National Pension Commission (PenCom) and the National Insurance Commission (NAICOM) to move about N500 billion annuity funds from the custody of insurance companies to Pension Fund Custodians (PFCs) has protected the funds against any insurance companies that may be unable to meet the new capital requirement by NAICOM.

    She spoke on the sideline of the 16th Retirement Benefit Documentation Seminar for employees in Lagos.

    Speaking on the recapitalisation in the insurance industry, she said the state was not worried whether or not an insurance company offering annuity and holding funds will meet the new capital requirement of N18 billion, from N3 billion as composite insurance companies.

    According to her,  a meeting was held with chief executive officers of companies providing annuity cover for the state’s retirees.

    She listed FBN Insurance, ARM Life, AIICO Insurance, LASACO Assurance, Leadway Assurance, Custodian Insurance and African Alliance Insurance Plc as firms the state met with.

    She said: “NAICOM recently said General Insurance Business and Composite insurance companies must recapitalise to over N18 billion. The recapitalisation of these companies will not affect annuity pension fund asset. For us at LASPEC, we have always been very careful in our administration of the state retirees fund. This is why we ensured that most of the insurance companies we have are composite.

    “We had a meeting with all CEOs of the companies involved few days ago where we talked to one another and understood the situation. We wanted to know what effort that they are making to ensure that they are fully recapitalised. Fortunately for us, majority of the companies have the muscle to pull through. Yes, we have some that have some challenges but we are not too worried because the funds are not with them.

    “The circular by PenCom and NAICOM which directed that annuity funds be domiciled with the custodians is a very good thing for us. So the funds are not with the insurance companies,” she said.

    PenCom had stated that it became necessary to compel the companies to transfer annuity funds in the kitty of insurance companies to PFCs due to the unethical and sometimes illegal dealings of insurers with the annuity funds of their customers.

    It claimed that some insurance operators were allowing retirees to use their annuity funds as collateral for loans, which it said negated the pension law.

    As such, it explained that keeping all pension funds in the custody of the PFCs as specified by law would prevent unethical practices.

     

  • Royal Exchange’s directors hold emergency meeting on recapitalisation

    Directors of Royal Exchange Plc are to meet tomorrow in an emergency meeting aimed at reviewing ongoing recapitalisation process of the company.

    The board of the company indicated that the emergency meeting will receive and consider “update on the proposed investment in the company” among other businesses.

    Earlier, he board met to consider capital raising proposals and restructuring of the insurance-led investment group. The previous meeting had reviewed proposed investment in the company and other restructuring issues as well as the then National Insurance Commission (NAICOM)’s tier-based minimum solvency capital policy for the insurance industry. NAICOM subsequently cancelled the new capital structure.

    Royal Exchange Plc Company Secretary, Sheila Ezeuko, confirmed tomorrow’s meeting in a regulatory filing at the Nigerian Stock Exchange (NSE).

    Market analysts said the latest meeting indicated progress has been made in the supplementary capital issue, aimed at boosting the capital base of the insurance-led group and put it in stronger position to withstand any regulatory headwinds in the industry.

    Many analysts believed that insurance companies are still wary that NAICOM may reintroduce its new capital requirement or related policies. Under the aborted tier-based minimum solvency capital policy, insurers were to be classified into three tiers according to the minimum capital base and risk-bearing capacity. Tier 1 insurance companies are required to have minimum capital base of N9 billion for general insurance and N6 billion for life insurance, implying a composite capital base of N15 billion. Tier 2 companies are divided into two categories, with N4.5 billion minimum capital base for general insurance and N3 billion for life assurance. Thus a composite insurance-general and life insurance, will be required to have minimum capital base of N7.5 billion. Tier 3 companies will continue to operate on the existing minimum capital base of N3 billion for general insurance and N2 billion for life insurance, implying a composite capital base of N5 billion for a composite tier 3 insurance company.

    Under the risk-based capitalisation, tier 1 companies will be able to undertake all risks including annuity and high-level special risks such as energy and aviation risks. Tier 2 companies will undertake retail insurance as prescribed under Tier 1, including commercial and industrial risks and group life assurance while tier 3 companies will only be able to write retail insurance only including micro insurance, motor, fire, agriculture, compulsory liability insurances, individual life, health and miscellaneous insurance.