The Central Bank of Nigeria (CBN) has announced revised minimum capital requirements for banks operating within the country, aiming to bolster their financial strength and resilience.
Under the new guidelines, commercial banks with international authorization must maintain a minimum capital of N500 billion, while those with national authorization require a minimum of N200 billion. Additionally, banks with regional licenses are mandated to maintain a capital base of N50 billion.
In a statement issued by CBN’s acting Director of Corporate Communications, Mrs. Hakama Sidi Ali, the deadline for compliance with the new capital requirements is March 31, 2026.
Furthermore, merchant banks must uphold a minimum capital of N50 billion, while non-interest banks with national and regional authorizations are required to raise their capital thresholds to N20 billion and N10 billion, respectively.
The move follows the CBN’s call for financial institutions to expedite action on recapitalization efforts to fortify the resilience of the financial system.
In a circular addressed to commercial, merchant, and non-interest banks, as well as promoters of proposed banks, the CBN mandated compliance with the new minimum thresholds within 24 months, starting from April 1, 2024.
The recapitalization initiative, initially disclosed by CBN Governor Mr. Olayemi Cardoso, aims to enhance banks’ capacity to support the Nigerian economy’s growth.
Banks are encouraged to explore various avenues to meet the new capital requirements, including private placements, rights issues, mergers and acquisitions (M&As), and license authorization upgrades or downgrades.
The circular clarified that the minimum capital shall comprise paid-up capital and share premium only, excluding additional Tier 1 (AT1) capital.
Despite the capital increase, banks must ensure strict compliance with the minimum capital adequacy ratio (CAR) requirement applicable to their license authorization. Failure to comply may necessitate injecting fresh capital to rectify the situation.
For proposed banks, the minimum capital requirement shall apply to all new applications submitted after April 1, 2024. However, pending applications with a capital deposit or Approval-in-Principle (AIP) will continue to be processed.
To facilitate implementation, banks are required to submit detailed implementation plans by April 30, 2024, outlining chosen strategies and timelines. The CBN will monitor and ensure compliance with the new requirements within the stipulated timeframe.
With the revised computation of paid-up capital and share premium, existing banks must adjust their capital structures accordingly. This adjustment may require substantial capital raising efforts, as illustrated by examples of major banks facing significant capital shortfalls.
The CBN’s directive underscores its commitment to maintaining a robust banking sector capable of driving Nigeria’s economic development and stability.