The Central Bank of Nigeria's decision of allowing banks to raise money from the capital market has received mixed reaction. Explaining the rationale behind the central bank's move, CBN 's spokesman, Festus Odoko said that the banks were free to access the capital market, as the second phase of the banks' consolidation was not regulatory induced. Odoko further said that if banks felt the need for more funds, they had the liberty to do so and approach the capital market.
However, some analysts felt it would not be in the best interest of the economy for continuing with the trend. Criticizing CBN's decision, Crusade Insurance's (Nigeria ) Managing Director and Chief Executive Abidoye Oyelami called upon the government and the National Insurance Commission to discourage banks from seeking fresh funds from the capital market until end of February 2007. February 2007 is the deadline given to insurance companies to re-capitalize. Oyelami said that an intervention was necessary so as to ensure the insurance sectors' consolidation program. The banking sectors' consolidation exercise had concluded at the end of last year and had seen several banks raise funds by way of initial and rights issues to meet the minimum capitalization norms.
However, some analysts felt it would not be in the best interest of the economy for continuing with the trend. Criticizing CBN's decision, Crusade Insurance's (Nigeria ) Managing Director and Chief Executive Abidoye Oyelami called upon the government and the National Insurance Commission to discourage banks from seeking fresh funds from the capital market until end of February 2007. February 2007 is the deadline given to insurance companies to re-capitalize. Oyelami said that an intervention was necessary so as to ensure the insurance sectors' consolidation program. The banking sectors' consolidation exercise had concluded at the end of last year and had seen several banks raise funds by way of initial and rights issues to meet the minimum capitalization norms.
