The Central Bank of Nigeria (CBN) has reported substantial advancements in the ongoing recapitalization efforts for banks across the nation. As part of a strategic initiative to enhance the stability and resilience of the financial sector, the CBN announced an increase in the minimum capital base for commercial banks with international authorization to N500 billion. For those banks recognized as national banks, the new minimum is set at N200 billion. This pivotal change reflects the CBN’s commitment to fortifying the banking sector, ensuring that it can withstand economic pressures and continue to serve the needs of Nigerians effectively.
The apex bank has mandated that all banks must comply with these new capital requirements within a rigorous timeframe of 24 months. The compliance period will commence from April 1, 2024, and conclude on March 31, 2026. This timeline underscores the urgency of the recapitalization exercise, emphasizing that banks must take proactive steps to meet their new financial obligations.
CBN Governor’s Remarks
During a press conference held after the 300th Monetary Policy Committee (MPC) meeting, CBN Governor Olayemi Cardoso elaborated on the current state of the banking system. He observed that, overall, there has been continued stability within the sector, enabled largely by notable improvements in key performance indicators. “The committee reaffirmed the continued stability of the banking system following notable improvements,” Cardoso stated, highlighting the positive trajectory of the banking landscape.
Furthermore, the MPC urged the CBN to maintain vigilant oversight over the banking industry to ensure adherence to regulatory guidelines. “Members thus called on the bank to sustain its effective oversight of the industry to ensure compliance with regulatory and macroprudential guidelines,” he added. This commitment to oversight is crucial as it reinforces the CBN’s role in fostering a robust banking environment.
Banks Meeting Capitalization Requirements
Prominent commercial banks are already making strides towards meeting these heightened capitalization requirements. Notably, Access Bank and Zenith Bank have successfully fulfilled the N500 billion mandate ahead of schedule. In December 2024, Access Bank raised an impressive N351 billion, while Zenith Bank raised N350.46 billion through a combination of a rights issue and public offering in January 2025. Zenith Bank’s strategic efforts have led to an increase in its capital base to N614.65 billion, surpassing the minimum requirement and achieving an impressive 160% capitalization.
Monetary Policy Decisions
In conjunction with these recapitalization measures, the CBN’s MPC also made significant monetary policy decisions. The Monetary Policy Rate (MPR) has been retained at 27.5%, a decision that reflects a consensus among the MPC members. All twelve members voted unanimously to maintain the current policy rates, reinforcing the stability of the monetary framework. Key policy decisions include:
- Monetary Policy Rate (MPR): Held steady at 27.5%
- Asymmetric Corridor: Unchanged at +500/-100 basis points around the MPR
- Cash Reserve Ratio (CRR): Maintained at 50% for Deposit Money Banks and 16% for Merchant Banks
- Liquidity Ratio: Left unchanged at 30%
What You Should Know
As commercial banks aim to align with the new capital expectations, it’s essential to clarify the distinctions in capital requirements based on authorization levels. Banks with international authorization must now meet a minimum capital base of N500 billion, while those with national authorization are required to uphold a base of N200 billion. Further down the hierarchy, banks with regional authorization must maintain N50 billion, and merchant banks are also required to have N50 billion. Non-interest banks with national and regional authorization have capital requirements set at N20 billion and N10 billion, respectively.
The new capital requirements will exclusively comprise paid-up capital and share premium, signifying that Shareholders’ Fund will not be included in this reckoning. This delineation ensures clarity in capitalization standards, enabling a more consistent application across the banking sector.
