2 banks have N622bn capital base - Soludo

Idowu Samuel, Abuja - 06.05.2008

The banking sector in Nigeria has now been standing shoulder to shoulder with its counterpart in the most advanced countries of the world even as two of the Nigerian banks could boast of about N622 billion capital base, part of which was sourced from the capital market.

The governor of Central Bank of Nigeria (CBN), Professor Chukwuma Soludo, disclosed this in Abuja on Monday at the opening session of an investigative hearing on capital market being anchored by the House of Representatives Committee on Capital Market.

He disclosed also that the stock market in the country was now the second best in Africa after that of South Africa. Soludo also said that as of March this year, the Nigerian Stock Exchange exceeded $100 billion mark in terms of investment which he attributed to positive development and the initiative by the Federal Government on banking conslidation.

“As we speak now, two banks; each of them has a shareholders fund greater than the 89 banks put together. One has N302 billion in terms of shareholders fund, much of it raised from the capital market. The other one has N320 billion, much of it also raised from the capital market.

He said at the moment, the Nigerian banking industry could be rated side by side with banks in emerging economies in the world including Israel, China, India, Poland and South Africa.

“Prior to consolidation, the total number of shareholders in our banks was about five million investors. But today, we are talking about nine million investors within a short space of time. It is important to know that we appreciate the magnitude that the issue of size and appreciate the efforts of the stock exchange in coping with this magnitude of changes that has taken place within a short space of time,” he said.

He said the level of success attained in the banking sector had made the stock market a key instrument for wealth creation and spread of prosperity among Nigerians, adding that of the 10 most capitalised companies on the stock exchange, eight of them were banks.

“The boom in the banking sector has become the key drive of not only the national economic prosperity that is going on in all other sectors of the economy, but also specifically the boom in the capital market.

“If you take the entire index itself, probably not less than 60 per cent of the index is accounted for by the banking sector. The banking sector is not just the dominant sector today in the Nigerian economy, but the dominant sector in the capital market,” he said.

Reeling off more statistics, Souldo said as of February 2007, the total market capitalisation stood at $35 billion, adding that by early December 2006, the London Financial Times had predicted that the Nigerian Stock Exchange would reach a total market capitalisation of up to $100 billion before the end of 2007 at the rate of its growth.