LCCI Proposes Recapitalisation Guidelines for Rescued Banks

Lagos Chamber of Commerce and Industry (LCCI) has proposed guidelines for recapitalisation for the banks recently rescued by the Central Bank of Nigeria (CBN).
LCCI second quarterly report released and presented by Otunba Femi Deru, the President of the Chamber listed guidelines which are mandatory for the smooth recapitalisation of the challenged institutions.
The report stated that the proposed recapitalisation of the rescued banks and the decision of the CBN to invite investors has generated intense concerns among stakeholders in the banking industry.
According to the report, “Our position is that the process should be done in line with the relevant laws and within the statutory framework prescribed under the Companies Allied Matters Act (CAMA) and the Banks Other Financial Institutions Act (BOFIA).” 
Enumerating the guidelines, LCCI said the necessary first step should be to invite existing shareholders to recapitalise their banks failing which new investors will be called upon to take up any outstanding shares.
LCCI added that in the process of recapitalisation, the Board of Directors of the affected banks in consultation with CBN should call a Board of Directors meeting to fix the amount of recapitalistaion required and articulate the modalities for rights offer.
It explained that an Extraordinary General Meeting should be held by the Board to approve the scheme subject to the approval by the CBN.
“Deadlines should be fixed for payment of the rights offer. Only offers not paid up by the set deadline will be available to new investors. After conclusion of all the payments, a final Extraordinary General Meeting should be called to elect new directors.”
“In our view this is the appropriate course of action to follow in this matter,”
LCCI also lamented that the rate of unemployment in the Nigerian economy is currently one of the highest in the world standing at 19.7 percent.
The Chamber stated that over 50 percent of the youths in the urban areas are unemployed saying that it is a very disheartening situation for parents who had laboured and strained to educate these youths.
According to the Chamber, the state of affairs has assumed the dimension of an economic and social crisis adding that there is a relationship between rising criminality and unemployment.
Proffering solutions to the unemployment crisis, LCCI proposed that there is an urgent need to increase support for SMEs and business start-up through capacity building and funding, encourage domestication of private and public sector spending in order to boost the multiplier effect of domestic spending on the economy, promote sectoral linkages in the economy in order for economic sectors to be mutually supportive and to give a greater attention to the agricultural sector which he said has enormous job creation potentials.
LCCI said that the credit crisis which was triggered by the banking sector reforms in the second quarter of the year has made investors face challenges in accessing credit saying that the issue is not that of scarcity of loanable funds or absence of liquidity but is a case of tight credit criteria
LCCI pointed out that in the first six months of the year, the stock market recovery was slow adding that all share index grew by 25 percent while market capitalisation grew by 23 percent.
It added that with increased liquidity in the banking system and the low returns in the money market, there is expectation for a much faster recovery in the market than is presently the case.