The Central Bank of Nigeria (CBN) warns that without stronger governance and risk discipline, the success of the country’s ongoing bank recapitalisation programme is at risk.
Dr Blaise Ijebor, Director of Risk Management Department and Chief Risk Officer at the CBN, said this on Thursday at a virtual risk management roundtable organised by the Association of Enterprise Risk Management Professionals (AERMP).
The event, held in Lagos, had the theme: “Recapitalisation, Mergers and Acquisitions in the Nigerian Financial System; Minimising Risks and Maximising Opportunities for Greater Post-Recapitalisation Value”.
Ijebor, represented by another Director, Olabanji Samuel, said the recapitalisation exercise was a macro-financial stability intervention designed to strengthen the resilience of financial institutions and position the sector for sustainable growth.
He referenced previous consolidation efforts, such as the 2004–2005 banking reforms and the 2009 financial crisis, noting that capital alone cannot guarantee stability; strong governance and risk practices remain crucial.
“Capital builds strength, but governance sustains it,” he said.
Previous cases show that strong risk frameworks are necessary to prevent governance and credit issues from undermining even well-capitalised institutions.
He said that the current recapitalisation exercise was forward-looking and aligned with global standards, incorporating stress testing, capital adequacy and recovery planning to ensure banks can withstand shocks without public intervention.
Ijebor said the exercise placed greater responsibility on risk and compliance professionals, describing them as strategic partners.
He urged risk leaders to provide forward-looking assessments of how recapitalisation and potential mergers and acquisitions could alter institutional risk profiles, while compliance officers should anticipate regulatory implications.
He identified key risk areas requiring attention, including balance sheet vulnerabilities, operational and integration risks, systemic risks, and governance and compliance concerns.
He stressed the need for rigorous stress testing, accurate asset valuation, strong board oversight and careful management of anti-money laundering and counter-terrorism financing frameworks.
According to him, the recapitalisation process also presents an opportunity for banks to strengthen enterprise risk management systems, improve data quality and integrate risk considerations into strategic planning.
He emphasised the need for prudent risk-taking alongside greater capital, ensuring boards align allocations with sustainable value creation.
He said that if properly 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.
Ijebor stressed the importance of board and executive accountability, saying that transparency, strong incentives, and robust governance were essential to the success of recapitalisation.
He said the ongoing exercise represented a pivotal moment for Nigeria’s financial system, with the potential to build stronger institutions capable of driving economic growth.
“The difference between success and failure will be shaped by governance, discipline and strategic clarity,” he said.
At the event, panellists noted that while Nigeria’s multi-sector recapitalisation was helping to strengthen financial institutions, it was also increasing systemic risks. They stressed the need for stronger coordination and enhanced governance to address these emerging challenges.
Prof. Olufemi Awoyemi, Founder and Chairman of Proshare Ltd, pointed out that the simultaneous capital raising across different sectors was putting pressure on the market’s capacity to absorb new capital and exposing weaknesses in coordination among regulatory bodies.
Ms Bunmi Lawson, pioneer Managing Director/Chief Executive Officer of EDFIN Microfinance Bank Ltd, emphasised that as institutions grow larger through recapitalisation, there is a heightened need for robust risk management frameworks, increased regulatory oversight, and effective strategies for deploying the new capital.
Prof. Ehi Esoimeme, Professor of Business Law and Ethics at James Hope University (Nigeria), raised concerns about the increased risk of financial crime following recapitalisation. He advocated for stricter due diligence, improved data management, and enhanced monitoring to mitigate these risks.
The panellists concluded that while recapitalisation offers growth opportunities, maintaining effective governance and robust risk management is vital for sustaining value.
