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The Securities and Exchange Commission has revealed its stance against the admittance of illicit funds into the capital market through the fresh banking recapitalisation exercise.
The Executive Director (Operations) of the commission, Dayo Obisan, revealed this on Thursday at a symposium organised by the Association of Capital Market Academics of Nigeria, with the theme ‘Banking Sector Recapitalisation Implications for the Nigerian Capital Market’.
Obisan revealed that the commission had a positive outlook on the banking sector recapitalisation exercise and was motivated to work with stakeholders to achieve a smooth process.
He said, “For us at the SEC, it is all positive. The journey has already started. So, beyond the announcement, there are a lot of things that have been happening behind the curtains and will keep happening so that we have a successful and flawless recapitalisation exercise that would be borne of experience, towards a more favourable and positive environment.
“We will continue to learn from some of the things we didn’t do too well and from some of the things we did relatively okay, some of the things we can improve on and some of the things we shouldn’t go near at all.
“I liked some of the things that the chairman of the Senate Committee on Capital Market touched on earlier about having clean money or verifiable money in the system. So, we don’t have laundered money that we will all have to be running around later to cure. That forms part of the things we are looking at at the SEC, which forms part of the considerations for fund verification exercise to the fore.”
He added that while fund verification would not ordinarily be within its purview, it was willing to work with other regulators to ensure illicit funds do not make it into the capital market.
“Ordinarily, capital verification can be done by the CBN itself, and in some extreme cases, the NFIU, and you have other things that apply that depend on other institutions like the CAC.
“If you keep having this, I think it makes more sense for you to start engaging those institutions because their outputs form our input in making fair decisions, in approving and disapproving applications.
“We have even started and announced at the CMC earlier today. We have started some regulatory engagements, and we will soon take them to the market so that the quality of filing, and the dependencies in terms of the requirements of such filings would be known, and predictably determined by other institutions so that we can have a relatively smoother, faster process, so that the concerns that the distinguished senator had mentioned and some of the practices that some of us worry about in the market are taken care of right from the application stage,” he asserted.
In his welcome address, the Chairman of the Senate Committee on Capital Market, Osita Izunaso, raised concerns about illicit funds.
He assured that the Senate was ready to work with industry players to address concerns in the sector.
Meanwhile, the President of the Chartered Institute of Stockbrokers, Oluwole Adeosun, maintained that the capital market can support the fresh capitalisation exercise.
He said, “The market is able and has expanded in the last ten years to be able to withstand any challenges with this capital raising exercise. It is important to know that investors have started to position themselves in the stocks of Tier 1 banks with the announcement of the planned recapitalisation last year.”
Adeosun also called on the banks to consider other options beyond the right issues, as had been seen in recent days in the sector, given the size of the funds needed to be raised as well as to bring in a fresh set of investors into the market.
“There should be more than a rights issue. We believe that some of them should go by private offer and public offer because the capital is huge so that we can bring in more shareholders into the market. We believe it is another opportunity for Gen Zs and millennial investors to come into the market.
He, however, projected that the sale of banks to another was unlikely given the stability of banks before now as well as the two-year time frame that the banks have to raise the funds.
In her comments, the Chief Executive Officer of EmergingAfrica Group, Mrs Toyin Sanni, asserted that the current recapitalisation move is good for the country, as it would encourage foreign inflow of capital.
In late March, the CBN announced an upward review of the minimum capital requirement for banks in the country.
The apex bank mandated a minimum capital of N500bn, N200bn and N50bn for commercial banks with international, national, and regional licenses, respectively.
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