Financial expert and head of investment and research at Meristem Securities Limited, Praise Ihensekhien, has hinted that the recent recapitalization policy by the Central Bank of Nigeria (CBN) could result in a shift of preference among shareholders and investors towards bank stocks, due to an increased flow of liquidity into the banking sector.
Ihensekhien made this disclosure in a statement on Saturday during a webinar hosted by Nairametrics.
The webinar which focused on Nigeria’s Economic Recovery is themed “CBN Policies and its Impact on Wider Economy.”
Addressing the CBN’s recent bank recapitalization mandates, Ihensekhien stated that this move will necessitate banks to augment their capital, enhancing their appeal to investors and shareholders in the stock market.
She observed that the recapitalization policy would intensify the attractiveness of the banking sector for investment, especially for those banks already benefiting from excess liquidity and high return on investment.
Furthermore, Ihensekhien said while bank recapitalization can curb inflation in the short-term, it might also cause inflationary pressure in the long term as money supply increases in the country.
According to the financial expert, expanding the capital base of banks will result in a considerable increase in credit to the private and public sectors.
She said that the more the capacity of the banks increase the more likely the government can rely on domestic lending environments to fund the deficit of its budget.
Nairemetrics earlier reported that the Central Bank of Nigeria (CBN) increased the capital base for commercial banks with international authorization to N500 billion and national banks to N200 billion.