Expert Urges CBN to Leverage IT, BVN for Swift Bank Offer Verification

From left; Group CEO; Cowry Asset Management Limited; Mr. Johnson Chukwu; Group Chairman, NGX Group Plc; Alhaji, Dr. Umar Kwairanga, Chairman, Capital Market Correspondents Association of Nigeria (CAMCAN): Mrs. Chinyere Joel-Nwokeoma and Divisional Head; (Legal and Enforcement) the Securities and Exchange Commission (SEC); Mr. John Achile represented the Director General of SEC; Dr. Emomotimi Agama, during the CAMCAN 2024 annual workshop held on Saturday in Lagos.

Economist and CEO of Cowry Asset Management Limited, Mr. Johnson Chukwu, has called on the Central Bank of Nigeria (CBN) to leverage advanced information technology (IT) systems and Bank Verification Numbers (BVN) to expedite the verification process for banks’ offers. This recommendation comes amidst growing investor frustration over prolonged delays, with some offers remaining unresolved nearly four months after closure.

Speaking at the annual workshop of the Capital Market Correspondents Association of Nigeria (CAMAN) in Lagos, themed “Banks’ Recapitalisation: Bridging the Gap Between Investors and Issuers in the Nigerian Capital Market,” Chukwu emphasized that deploying IT tools and the BVN could significantly accelerate the acceptance or rejection of offers. This, he noted, would enable investors to receive their allotments promptly or redirect their funds to other profitable ventures.

“The current lengthy verification process is undermining investor confidence,” Chukwu stated. “It’s particularly problematic when offers are oversubscribed, and investors risk losing valuable reinvestment opportunities if their funds are returned late.”

Chukwu also criticized the CBN’s stringent requirements for investing in bank shares, including the submission of three-year audited financial statements, board resolutions authorizing investments, and three years’ tax clearance certificates for corporate investors. According to him, these hurdles deter potential investors and stifle capital market activity.

READ AlSo THIS,: https://amehnews.com/2024/12/08/sec-calls-on-banks-to-enhance-corporate-governance-amid-recapitalisation-efforts/

“While regulation is critical for maintaining the integrity of the financial system, the CBN must leverage existing customer information, such as BVNs, to streamline the process without imposing excessive burdens on investors,” he added.

Strengthening the Banking Sector

Chukwu described bank recapitalization as a cornerstone for bolstering Nigeria’s banking sector and driving economic growth. He noted that successful capital-raising initiatives such as IPOs, rights issues, and bond offerings could enhance investor confidence and send positive signals across the financial market.

“A well-capitalized bank is perceived as financially stable, which reduces risk for investors and boosts market confidence,” Chukwu explained. “This stability encourages further investments, fueling the sustainable growth of the banking industry.”

However, Chukwu highlighted the need for greater collaboration between banks, investors, and regulators to ensure the sector remains resilient and competitive. He urged the CBN and other regulatory bodies to foster a more predictable policy environment, which would enable better planning and reduce regulatory risks for stakeholders.

Enhancing Transparency and Governance

Chukwu also called on banks to improve their transparency and disclosure practices. He stressed the importance of publishing detailed financial statements, risk disclosures, and forward-looking guidance to address information gaps and build trust.

“By tackling issues of information asymmetry, regulatory unpredictability, and liquidity constraints, while enhancing transparency and financial innovation, Nigeria’s capital market can unlock new opportunities for bank recapitalization,” Chukwu concluded.

The workshop underscored the pivotal role of recapitalization in reinforcing the financial sector’s stability and its potential to propel Nigeria’s economic advancement. Attendees agreed that adopting technological solutions and fostering investor-friendly policies are critical steps in achieving these goals.