Lagos: The Central Bank of Nigeria (CBN) says strong governance and risk discipline are critical to the success of Nigeria’s ongoing bank recapitalisation programme. Dr. Blaise Ijebor, Director of Risk Management Department and Chief Risk Officer at CBN, stated this during a virtual risk management roundtable organized by the Association of Enterprise Risk Management Professionals (AERMP).
According to News Agency of Nigeria, the event, which convened in Lagos, was themed: ‘Recapitalisation, Mergers and Acquisition in the Nigerian Financial System; Minimising Risks and Maximising Opportunities for Greater Post-Recapitalisation Value’. Ijebor, represented by Olabanji Samuel, said the recapitalisation exercise is a macro-financial stability intervention aimed at bolstering the resilience of financial institutions and positioning the sector for sustainable growth.
Ijebor pointed out that lessons from past consolidation efforts, particularly the 2004-2005 banking reforms and the aftermath of the 2009 financial crisis, demonstrated that capital alone could not guarantee stability. He emphasized that while capital builds strength, governance sustains it, referring to previous instances where weak governance, poor credit risk practices, and incentive-driven lending undermined well-capitalised institutions.
The current recapitalisation exercise is forward-looking and aligned with global standards, incorporating stress testing, capital adequacy, and recovery planning to ensure banks withstand shocks without public intervention. Ijebor noted that this process places greater responsibility on risk and compliance professionals, who are now considered strategic partners in ensuring the success of the recapitalisation.
He identified key risk areas requiring attention, such as balance sheet vulnerabilities, operational and integration risks, systemic risks, and governance and compliance concerns. Ijebor stressed the necessity for rigorous stress testing, accurate asset valuation, strong board oversight, and careful management of anti-money laundering and counter-terrorism financing frameworks.
Ijebor also highlighted the opportunity for banks to strengthen enterprise risk management systems, improve data quality, and integrate risk considerations into strategic planning. He cautioned against excessive risk-taking by urging boards to recalibrate risk appetite frameworks and align capital allocation with long-term value creation.
If properly managed, the recapitalisation exercise could unlock opportunities in infrastructure financing, capital market development, trade facilitation, innovation, and cybersecurity resilience. Ijebor emphasized that opportunities depend on the choices made today and underscored the importance of board and executive accountability, noting that transparency, long-term incentives, and strong governance structures are essential.
The ongoing exercise represents a pivotal moment for Nigeria’s financial system, with the potential to build stronger institutions capable of driving economic growth. Ijebor stated that the difference between success and failure will be shaped by governance, discipline, and strategic clarity.
Panellists at the event noted that Nigeria’s multi-sector recapitalisation is strengthening institutions but also creating systemic risks that require stronger coordination and governance. Prof. Olufemi Awoyemi, Founder and Chairman of Proshare Ltd, stated that simultaneous capital raising across sectors is straining market capacity and exposing coordination gaps among regulators. Ms. Bunmi Lawson, pioneer Managing Director/Chief Executive Officer of EDFIN Microfinance Bank Ltd, emphasized the need for stronger risk frameworks, regulatory capacity, and effective capital deployment for larger institutions. Prof. Ehi Esoimeme, a Professor of Business Law and Ethics at James Hope University (Nigeria), highlighted financial crime risks and urged stricter due diligence, data management, and monitoring systems.
The panellists agreed that while recapitalisation offers growth opportunities, effective governance and risk management are critical to sustaining value.