{"id":94901,"date":"2025-09-19T10:18:06","date_gmt":"2025-09-19T10:18:06","guid":{"rendered":"https:\/\/sotnews.agency\/?p=94901"},"modified":"2025-09-19T10:18:06","modified_gmt":"2025-09-19T10:18:06","slug":"nigerian-banks-eye-finishing-line-on-recapitalisation","status":"publish","type":"post","link":"https:\/\/sotnews.agency\/?p=94901","title":{"rendered":"Nigerian banks\u00a0eye finishing line on\u00a0recapitalisation"},"content":{"rendered":"
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\n \t<\/i> Read Time:<\/span>5 Minute, 24 Second <\/div>\n\n <\/div>
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For\u00a0Nigerian\u00a0banks, March 26, 2026 looms large on the horizon. That is when they must show they\u2019ve met the new capital requirements set by the Central\u00a0Bank\u00a0of\u00a0Nigeria\u00a0(CBN) for lenders operating in the country.<\/p>\n

In March 2024,\u00a0banks\u00a0were given two years by the financial system regulator to meet the new targets. The\u00a0banks\u00a0with both local and international operations were required to have minimum capital of 500bn naira, while those that operated only nationally need to have 200bn naira. Minimum capital for regional and merchant\u00a0banks\u00a0was set at 50bn naira, with non-interest\u00a0banks\u00a0required to have 20bn naira, if functioning nationally, and 10bn naira if functioning regionally.<\/p>\n

The exercise is the first time in two decades that\u00a0Nigerian\u00a0banks\u00a0have been asked to raise fresh capital. The last time was in 2004, when the maximum amount of capital for\u00a0banks\u00a0was set at 25 billion naira.<\/p>\n

That target it no longer deemed adequate given repeated currency devaluation and sustained inflation that has eroded the capital base of\u00a0banks. President Bola Tinubu\u2019s decision to end decades of fuel subsidies and float the naira exchange rate on taking office in 2023 have further accelerated the need for stricter targets.<\/p>\n

Increasing the minimum capital of\u00a0banks\u00a0in a bid to instill resilience in the country\u2019s financial system was among the responses of the Central\u00a0Bank\u00a0to the realities of Tinubu\u2019s economic reforms.\u00a0<\/p>\n

With six months left to go until the deadline, only eight of the country\u2019s 26\u00a0banks\u00a0have fully met the capital requirements. For the rest, it\u2019s likely going to be a sprint to wire \u2013 with those unable to meet the requirements possibly being forced to merge, be acquired by a competitor or leave the business.<\/p>\n

The Central\u00a0Bank\u00a0has demanded injections of new capital into the\u00a0banking\u00a0system, precluding any use of shareholders\u2019 funds or additional tier-1 capital (hybrid debt instruments like preferred shares and contingent convertible securities) as substitutes. Lenders have responded with new share offers, rights issues to existing shareholders and private placements by heavyweight investors.<\/p>\n

During July\u2019s monetary policy committee briefing, Central\u00a0Bank\u00a0of\u00a0Nigeria\u00a0(CBN) governor Olayemi Cardoso said that eight\u00a0banks\u00a0had already met the requirements.\u00a0<\/p>\n

\u201cThere has been a lot of interest locally in investing in the\u00a0banks,\u201d he said. \u201cWe will continue to do our part by building resilience, creating buffers and adhering to the rules.\u201d<\/p>\n

Banks\u00a0scramble to raise funds<\/h2>\n

Among the first off the mark were Access\u00a0Bank, Zenith\u00a0Bank, Ecobank\u00a0Nigeria\u00a0and Jaiz\u00a0Bank. Ecobank, the\u00a0Nigerian\u00a0subsidiary of Togo-based Ecobank Transnational, and Jaiz\u00a0Bank, a non-interest\u00a0bank, had already amassed the required funds. \u00a0<\/p>\n

Among those raising new funds, Access\u00a0Bank\u00a0was the first to conclude a rights issue, leaving it with capital of 595bn naira by March. Zenith followed with a combined rights issue and share offer that brought its capital to 615bn naira.<\/p>\n

Guaranty Trust\u00a0Bank\u00a0reached its own target through a two-phased approach that started with a rights issue in\u00a0Nigeria\u00a0that netted 351bn naira. Subsequently, the lender listed shares on the London Stock Exchange with proceeds of $105m to reach the required target. \u00a0<\/p>\n

For other peers such as United\u00a0Bank\u00a0for Africa and First\u00a0Bank, the country\u2019s oldest\u00a0bank, the process has moved less quickly.<\/p>\n

UBA plans to conclude its capital-raising process by the end of the third quarter, according to chairman Tony Elumelu. With a capital base of 116bn naira at the time of the CBN directive, the\u00a0bank\u00a0raised 251bn naira from a rights issue that ended in December, and hopes to raise the rest in the coming months. Another sale of 3.15bn ordinary shares to existing shareholders ended on September 5.<\/p>\n

First\u00a0Bank\u2019s\u00a0recapitalisation\u00a0efforts appear to have been delayed by a boardroom conflict in which Lagos billionaire Femi Otedola battled rivals for a takeover. Otedola had quietly acquired the parent company\u2019s shares until he had enough to assert ownership, forcing out rivals Oba Otudeko and Tunde Hassan-Odukale. The end of the battle should clear the way for First\u00a0Bank\u00a0to pursue\u00a0recapitalisation.<\/p>\n

\u201cStrong investor appetite has ensured that the vast majority of capital raisings so far have been successful,\u201d Fitch Ratings said in a recent assessment of the\u00a0recapitalisation\u00a0programme. \u201cMost first- and second-tier\u00a0banks\u00a0should be able to meet their new capital requirements through capital raisings alone. Therefore, we believe the likelihood of\u00a0banking\u00a0sector consolidation among first- and second-tier\u00a0banks\u00a0has decreased.\u201d<\/p>\n

Smaller\u00a0banks\u00a0pursue differing paths<\/h2>\n

Among the second-tier\u00a0banks\u00a0are Fidelity\u00a0Bank\u00a0and the First City Monument\u00a0Bank\u00a0(FCMB) group, both of which have international operations. Both have raised some initial capital and are now in the process of completing their\u00a0recapitalisations. Fidelity raised 176bn naira in fresh capital in 2024 and is moving to get an additional 195bn naira via private placement before the end of the year. FCMB has announced plans to raise more capital through a new share sale in time to comply with the new requirements.<\/p>\n

Wema\u00a0Bank, in its pursuit of the requirements of a national\u00a0bank, was among the first to raise funds through selling new shares to current investors. It has followed that up with a 50bn naira private placement to surpass the prescribed threshold of 200bn in naira. Wema expects to have a capital base of 276bn naira after\u00a0\u00a0recapitalisation, about 34% more than the required limit.<\/p>\n

Some other\u00a0banks\u00a0have opted for mergers. Union\u00a0Bank\u00a0\u2013\u00a0Nigeria\u2019s second-oldest lender \u2013 and new generation\u00a0bank\u00a0Titan Trust\u00a0Bank\u00a0were the first to announce a successful merger with the approval of the Central\u00a0Bank. It has been touted as a marriage of experience and cutting-edge technology. Unity\u00a0Bank\u00a0and the regional Providus\u00a0Bank\u00a0have notified the regulators of their plans to merge to meet the requirements for a national licence.<\/p>\n

There is still not much clarity on the plans of two foreign-owned\u00a0banks, Standard Chartered\u00a0Bank\u00a0and Citibank, to meet the capital requirements. Currently, Standard Chartered\u2019s local bank has capital of 45.4bn naira while Citibank\u2019s local bank has 14.4bn naira. To meet the requirements for a national\u00a0banking\u00a0licence, Standard Chartered needs an extra 154bn naira while Citibank needs 185bn naira. They have the option to raise the required funds, merge with others or even exit\u00a0Nigeria\u00a0completely. What options they choose will become clearer as the March 2026 deadline approaches.<\/p>\n<\/p>\n<\/div>\n

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\"NigerianAhead of the Central Bank’s March deadline, banks must decide whether to raise fresh capital, merge with rivals, or prepare for acquisition.<\/div>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"rop_custom_images_group":[],"rop_custom_messages_group":[],"rop_publish_now":"initial","rop_publish_now_accounts":{"facebook_2277560469115098_106292521332774":"","twitter_aToxNzczMzI3Njk4OTg4ODUxMjAxOw==_1773327698988851200":""},"rop_publish_now_history":[],"rop_publish_now_status":"pending","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[8836,1904,8837,8838,8839,7537,10,9],"tags":[],"class_list":["post-94901","post","type-post","status-publish","format-standard","hentry","category-acquisition","category-banking-and-finance","category-central-bank-of-nigeria","category-fresh-capital","category-merger","category-nigerian-banks","category-politics","category-popular"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/sotnews.agency\/index.php?rest_route=\/wp\/v2\/posts\/94901","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sotnews.agency\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sotnews.agency\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sotnews.agency\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/sotnews.agency\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=94901"}],"version-history":[{"count":0,"href":"https:\/\/sotnews.agency\/index.php?rest_route=\/wp\/v2\/posts\/94901\/revisions"}],"wp:attachment":[{"href":"https:\/\/sotnews.agency\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=94901"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sotnews.agency\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=94901"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sotnews.agency\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=94901"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}