CBN partner Security Commission on single registrar

The Central Bank of Nigeria (CBN) has said it is working with the Securities and Exchange Commission (SEC) towards creating a single registrar for all securities in the capital market.

Samuel Oni, CBN Director for Banking Supervision, who stated this at a workshop in Benin, Edo State capital, said this is part of effort at ensuring stability of the Nigerian financial system.

Registrars are institutions that keep the register of shareholders of a company and coordinate the payment of dividends and other fiduciary benefits that come with owning shares in such companies.

There are currently over 10 registrars handling the register of the over 200 listed equities on the Nigerian Stock Exchange as well as several other public companies in the country.

Pillars of reforms

Mr. Oni said this is part of the four pillars of the banking system reforms which the Central Bank started on 14 August last year when it intervened in some banks that were deemed to be weak. The four pillars, according to him, are; ensuring the quality of banks, establishing financial stability, enabling healthy financial sector revolution, and ensuring that the sector contributes to the real sector. "To ensure financial stability, the CBN would champion the development of the capital market through the improvement of its depth and accessibility as an alternative to bank funding," he said.

The CBN director also stated that the single registrar would allow for better coordination and regulation of market activities. "To restore public confidence and credibility in the banking system, the CBN carried out an exercise to review, evaluate and determine the quality of bank portfolios especially their exposure to margin lending," he said.

Arumah Otteh, the Director General of SEC, recently stressed the need for close collaboration with all other regulatory agencies in the financial sector towards maintaining close monitoring and regulation of operators. Ms. Otteh said the Financial System Regulatory Coordination Committee (FSRCC), which comprises the CBN, Nigerian Stock Exchange, National Pension Commission, National Insurance Commission, Corporate Affairs Commission, provides the platform for the regulators to do a better job. Mr. Oni explained the Central Bank was working at reducing the informal sector and ensuring greater financial inclusion as the economy size not captured by official data is too large to be ignored. "Enhanced financial inclusion would result in more accurate measurement of economic outputs, increase the tax base and tax revenue as well as more effective policy development and more efficient use of financial infrastructure," he said.

Late intervention

Biodun Adedipe, managing partner of Biodun Adedipe and Co. said the intervention of the CBN in the banking sector last year that resulted in the injection of N620 billion to rescue eight distressed banks was inevitable. "As far back as 2006/2007, I expected the Central Bank to have conducted a credit audit which should have been the major plank of the stress test that the CBN did between July and August last year," he said. "So clearly, the fault was on both sides of the divide not only on the part of operators alone."

Mr. Adedipe added that the CBN should give current shareholders the right of first refusal before inviting other interested parties to pick up the eight rescued banks. "The CBN should engage operators more in dialogue and ensure that its policy initiatives are inclusive rather than creating the impression that the ideas are lacking here or that everyone around is a rogue," he said.