Chairman, FBN Holdings, Femi Otedola, yesterday threw his weight behind the implementation of a windfall tax in the country, noting that the move will foster a fairer and more equitable economic environment.
Otedola also criticised some bank chief executives who prioritise personal gains over their duty to shareholders and customers, thereby jettisoning core banking values.
He particularly accused four banks of spending over $500 million on the purchase of private jets, warning that their extravagant lifestyles could erode public confidence in the industry among other far-reaching implications.
Otedola also hailed the ongoing banking industry consolidation, adding that it would further strengthen the industry.
He explained that windfall taxes are often levies on companies or individuals who receive substantial, unexpected profits due to circumstances beyond their usual control or investment.
Otedola maintained that taxing such extraordinary gains ensures a fairer distribution of wealth, allowing those who benefit disproportionately to contribute more significantly to the broader societal good.
He said his endorsement of the initiative was in line with ongoing efforts to reform the Nigerian banking sector to enhance economic stability and integrity within the nation’s financial institutions.
According to the billionaire businessman, the revenues generated from windfall taxes could be channelled into essential public services such as healthcare, education, and infrastructure, benefiting all citizens and helping to reduce social inequalities.
He said, “The recent announcement of a windfall tax on the extraordinary profits earned by Nigerian banks is a significant first step towards achieving these goals.”
Otedola further pointed out that the financial statements of manufacturing, telecoms, and SMEs indicate that many of these companies may not be able to pay corporate tax for the next two years, as they are currently showing negative equity.
He said, “It is essential for the government to step in and provide support to bridge these gaps, ensuring revenue generation and fostering economic development.
“The importance of aligning financial priorities with Nigeria’s broader economic development goals cannot be overstated.
“The federal government’s reforms are both timely and essential for the sustainable growth of our economy.
“By taking decisive action to implement these changes, the federal government is demonstrating a commitment to ethical leadership and accountability.
“These reforms will empower our banking sector to play a pivotal role in driving Nigeria’s economic development, ultimately securing a prosperous future for all Nigerians.”
The FBN Holdings chairman, who spoke on recent developments in the banking industry, further hailed the recapitalisation initiative by the Central Bank of Nigeria (CBN) which sets new minimum capital thresholds of N500 billion for international banks and N200 billion for national banks as well as N50 billion and N20 billion for regional and non-interest banks, respectively.
He said the move was aimed at strengthening banks’ capacity to support the country’s broader economic development goals.
He insisted that banks needed to focus on “operational efficiency, technological innovation, and customer service, rather than executive extravagance”.
Notwithstanding the progress so far achieved with the banking sector reforms, Otedola said there was an urgent need to address entrenched issues within the banking sector.
He said, “A concerning trend has emerged where some bank chief executives prioritise personal gain over their duty to shareholders and customers.
“The core values of banking—trust, integrity, and service—must be upheld. I am particularly critical of the culture of flamboyance, especially the ownership and operation of private jets.”
Specifically, he said Nigerian banks are spending about $50 million annually “just on maintaining private jets” adding that over $500 million went into the purchase of nine private jets by four banks.
“To regain the trust of the Nigerian public and fulfill its pivotal role in the nation’s economic development, the banking sector must realign its financial priorities.
“Investments should be channeled into areas that directly improve customer services and enhance technological infrastructure,” he said.