Nigerian Banks in “Reset Mode” as Central Bank of Nigeria Tightens Recapitalisation Rules

 

What’s Going On

The banking sector in Nigeria is undergoing a major shake-up under a recapitalisation mandate initiated by the Central Bank of Nigeria (CBN). 

The 2024 recapitalisation exercise requires banks to meet stricter capital thresholds by March 31, 2026. 

The push comes after a post-pandemic reset — when previous regulatory forbearance masked growing issues such as rising non-performing loans. 

Progress So Far: Who’s Compliant

As of now, 27 banks have raised fresh capital via public offers and rights issues to meet the new minimum capital requirements. 

Among the banks that have met the targets include major players: Access Bank, Zenith Bank, GTBank (subsidiary of GTCO), Wema Bank, Jaiz Bank, Stanbic IBTC Bank, Premium Trust Bank, Providus Bank, Lotus Bank, and Greenwich Merchant Bank. 

Some other large banks — including First Bank of Nigeria, Union Bank of Nigeria and United Bank for Africa (UBA) — are still expected to comply as the deadline approaches. 

Why Recapitalisation — and What It Means

Under the new rules, commercial banks with international licences must reach a minimum capital base of ₦500 billion; national banks ₦200 billion; regional banks ₦50 billion. 

This capital must comprise paid-up share capital and share premium — reserves and retained earnings are excluded. 

The regulatory tightening is meant to ensure banks remain robust to economic shocks — especially in a post-COVID, inflationary environment with currency pressures. 

With stronger capital buffers, banks are better positioned to lend to under-served sectors — including small businesses, rural communities, and support Nigeria’s ambition for broad-based growth. 

Challenges & Risks Ahead

Some smaller and medium-sized banks may struggle to raise the required capital — potentially leading to more consolidations, mergers, or exits. 

The redefinition of “capital base” to exclude reserves and retained earnings compels banks to raise new equity, which is a heavier demand than previous capital requirements. 

Despite recent strong profits recorded by major banks, the recapitalisation drive exposes underlying vulnerabilities (e.g. credit risk, liquidity pressures) that were previously masked. 

 What This Means for Nigerians & the Economy

More stable banks: Better-capitalised banks are more likely to withstand economic volatility and safeguard depositors’ funds.

Increased lending capacity: With solid capital bases, banks can extend more credit — especially to Micro, Small and Medium Enterprises (MSMEs), rural communities, and underserved markets.

Potential consolidation: Smaller banks may merge or exit, which could reduce competition but also create stronger banking institutions overall.

Support for economic growth: The recapitalisation aligns with broader national goals for economic development and could bolster infrastructure financing, fintech growth, and financial inclusion.