The Central Bank of Nigeria (CBN) has emphasised that strong corporate governance and rigorous risk discipline are essential to the success of the country’s ongoing bank recapitalisation programme.
This position was stated on Thursday by the CBN’s Director of Risk Management and Chief Risk Officer, Dr. Blaise Ijebor, at a virtual risk management roundtable organised by the Association of Enterprise Risk Management Professionals (AERMP).
The event, held in Lagos, was themed: “Recapitalisation, Mergers and Acquisitions in the Nigerian Financial System: Minimising Risks and Maximising Opportunities for Greater Post-Recapitalisation Value.”
Represented by another director, Olabanji Samuel, Ijebor described the recapitalisation exercise as a macro-financial stability measure aimed at strengthening the resilience of financial institutions and positioning the sector for sustainable growth.
Drawing from past experiences—particularly the 2004–2005 banking consolidation and the aftermath of the 2009 global financial crisis—he noted that capital injection alone does not guarantee stability.
“Capital builds strength, but governance sustains it,” he said, warning that weak governance structures, poor credit risk practices, and incentive-driven lending had historically undermined even well-capitalised institutions.
He explained that the current exercise is forward-looking and aligned with global best practices, incorporating stress testing, capital adequacy requirements, and recovery planning to ensure banks can withstand shocks without relying on public funds.
Ijebor further stressed that the programme places greater responsibility on risk and compliance professionals, describing them as strategic partners in the process.
He urged risk managers to provide forward-looking assessments of how recapitalisation and potential mergers and acquisitions could reshape institutional risk profiles, while compliance officers must anticipate and address regulatory implications.
Key risk areas identified include balance sheet vulnerabilities, operational and integration risks, systemic exposures, as well as governance and compliance challenges.
He also highlighted the need for robust stress testing, accurate asset valuation, strong board oversight, and strict adherence to anti-money laundering and counter-terrorism financing frameworks.
According to him, the recapitalisation process presents a strategic opportunity for banks to strengthen enterprise risk management systems, enhance data quality, and embed risk considerations into long-term planning.
Ijebor cautioned, however, that increased capital should not translate into excessive risk-taking, urging boards to recalibrate their risk appetite frameworks and align capital deployment with sustainable value creation.
He noted that, if effectively managed, the exercise could unlock opportunities in infrastructure financing, capital market development, trade facilitation, innovation, and cybersecurity resilience.
“Opportunities will not realise themselves; they depend on the choices we make today,” he said.
He added that transparency, executive accountability, and long-term incentive structures are critical to achieving the desired outcomes, describing the recapitalisation exercise as a pivotal moment for Nigeria’s financial system.
“The difference between success and failure will be shaped by governance, discipline and strategic clarity,” he added.
Panelists at the event, however, cautioned that while Nigeria’s multi-sector recapitalisation drive is strengthening institutions, it also poses emerging systemic risks that require stronger coordination and governance.
Prof. Olufemi Awoyemi, Founder and Chairman of Proshare Ltd, noted that simultaneous capital raising across sectors is stretching market capacity and exposing coordination gaps among regulators.
Similarly, Bunmi Lawson, pioneer Managing Director/Chief Executive Officer of EDFIN Microfinance Bank Ltd, stressed that larger institutions require more robust risk frameworks, enhanced regulatory capacity, and efficient capital deployment.
Prof. Ehi Esoimeme, Professor of Business Law and Ethics at James Hope University, highlighted growing financial crime risks, calling for stricter due diligence, improved data management, and stronger monitoring systems.
The panelists agreed that while recapitalisation presents significant growth opportunities, sustaining long-term value will depend on effective governance and sound risk management practices.
