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HomeBusinessWhy we embarked on banking consolidation exercise in 2004 ~Soludo

Why we embarked on banking consolidation exercise in 2004 ~Soludo

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By Oludare Mayowa


Sixteen years after the conclusion of the banking consolidation policy in the country, a former Governor of the Central Bank of Nigeria (CBN), Charles Soludo has explained the reason behind the exercise which saw the recapitalisation and repositioning of Nigerian banks.

Soludo, who is contesting the governorship of his home state, Anambra was the brain behind the banking consolidation exercise that saw banks’ capital base was jerked up to N25 billion from N2 billion in 2004.

At the end of the banking reform, the number of banks operating in the country shrunk to 25 from around 95 banking institutions then, making the biggest of such exercise to date.

Speaking over the weekend, Soludo said before the consolidation exercise Nigerian banks were not among the top 1,00 banks in the world.

According to him, the local banks were not capable of supporting investment of up to $500 million while many of them could not guarantee N3 million loans back then.

 “I am a very impatient person to see change happen and I am passionate in anything I focus on. At that time, no bank in Nigeria was in the top 1,000 banks in the world.

“If you needed to make an investment of $500 million, you had to go through the then 39 banks and it was an impossible task.

“If you wanted to borrow abroad, there was no bank here to guarantee that. So, I came to the realisation that if we wanted to build a private sector-driven economy, it was not possible with the rickety ‘mama and papa’ banks, which could not guarantee even N3 million loan. We, therefore, needed to pull down the house and rebuild it.

However, critics said though the consolidation exercise was a huge success, it was, however, marred by favoritism by the then management of the CBN.

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Speculations had it that some operators were hinted of the impending policy change ahead of the exercise, given them edges over their competition while some banks were indirectly supported through various regulatory forbearance to enable them to scale the hurdle to reach the N25 billion capital base. 

Despite the success of the consolidation exercise, Soludo was not granted a second term tenure as the CBN governor by the successive government and he was replaced by the deposed Emir of Kano, Lamido Sanusi.

Speaking on his personal ordeal during the banking reform, the professor of economics said his life was threatened by those opposed to the consolidation exercise to the extent that some unknown people attempted to kidnap his children.

“There was nothing I did not see. I received 19 written threats to my life. Even there were attempts to kidnap my children at Offa in Kwara State.

“So, it was a very brutal revolution. I had to evacuate my family during the banking consolidation because when you want to uproot a system, it is usually a deadly routine.” 

Soludo said that his quest to govern the state was not for personal enrichment as God had blessed him all around, even before he became 30 years.

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