Business
Walking tightrope of bank recapitalisation
As deadline approaches for the implementation of the new policy regime on bank recapitalisation, Nigerian lenders are edging toward a defining moment, with consolidation increasingly viewed as unavoidable for several lenders, reports Ibrahim Apekhade Yusuf
With approximately 22 out of 34 licensed commercial banks that have reached or surpassed the apex bank’s benchmark, which is roughly 65 percent compliance rate, it is obvious that the quest to achieve the new recapitalisation policy is going to be a battle of the fittest.
The recapitalisation exercise, which began in 2024, sets N500 billion for commercial banks with international authorisation, N200 billion for national banks, and N50 billion for regional banks. For non-interest banks, the thresholds are N20 billion (national) and N10 billion (regional).
The 24‑month compliance window ends on March 31, 2026, a regulation that’s triggering a wave of equity issuances, merger talks, and balance-sheet restructuring across the sector.
Interestingly, the recapitalisation echoes a 2004 exercise under then-CBN governor Charles Soludo, which forced banks to raise capital to N25 billion from N2 billion. That consolidation cut the number of lenders from 89 to 25 and paved the way for stronger players to emerge.
Bank classifications
From available information, lenders have completed the new capital raise with Access Bank, the country’s largest lender by assets, emerging as the first to scale through the hurdle.
International Banks
Access Bank
Access Bank raised a total of N351 billion through a rights issue, making the Lagos-headquartered lender the first Nigerian bank to meet the new capital base of N500 billion. The rights issue involved 17.77 billion ordinary shares at N19.75 each. With a combined share premium and paid-up capital of N602.8 billion, the bank has exceeded the CBN requirement by N102.8 billion.
Zenith Bank
Zenith Bank has also concluded its recapitalisation exercise, raising over N350 billion through a combination of rights issues and public offers. The bank’s share capital now stands at N614 billion, surpassing the minimum capital requirement for international banks.
First HoldCo (First Bank)
First HoldCo Plc has also met the Central Bank of Nigeria’s (CBN) minimum capital requirement of N500 billion. The milestone, according to the lender, was achieved following the completion of a series of strategic capital initiatives, including a Rights Issue, a Private Placement, and the injection of proceeds from the divestment of the Group’s merchant banking subsidiary.
GTCO
Guaranty Trust Holding Company (GTCO) stands among lenders that have completed their capital requirements. Nigeria’s most valuable lender raised its capital through a multi-tranche equity program, raising over N209 billion in its first phase (late 2024/early 2025), with plans for further fundraising, including a recent private placement for N10 billion, to strengthen its banking subsidiary (GTBank) and fund group expansion. The capital injection boosts GTBank’s paid-up capital to over N504 billion, fulfilling new regulatory mandates.
UBA
United Bank for Africa raised N178.3 billion through a rights issue, pushing its capital base above the N500 billion minimum set by the Central Bank of Nigeria (CBN) for lenders with an international license.
The capital raise, which closed in September 2025, follows a N239 billion injection completed in November 2024 that had lifted the bank’s capital to N355.2 billion. Combined, the transactions position UBA above the CBN’s recapitalisation threshold ahead of the March 2026 deadline, pending formal regulatory confirmation.
Fidelity Bank
Fidelity Bank has equally joined the league of lenders that have scaled through the new capital requirements ahead of the deadline. The bank’s eligible capital now stands at N564.5 billion from N305.5 billion – a rise that’s done through a private placement carried out under a mandate granted by shareholders at an extraordinary general meeting on February 6, 2025, authorising the bank to issue up to 20 billion ordinary shares.
The fundraising caps an aggressive capital-raising drive by Fidelity over the past two years. In 2024, the lender raised N175.85 billion through a public offer and rights issue, which brought its eligible capital to N305.5 billion. That left a shortfall of about N194.5 billion relative to the new minimum capital threshold.
National Banks:
Wema Bank
Wema Bank also announced the completion of its recapitalisation by raising N150 billion through a rights issue of 14.29 billion shares at N10.45 per share, concluded on May 21, 2025. The bank is awaiting final verification from the CBN, with a N50 billion portion of the offer currently under review by the Securities and Exchange Commission (SEC), according to posts on social media.
Citibank Nigeria
Citibank Nigeria Limited (Citi) has also announced that it had successfully met the Central Bank of Nigeria’s (CBN) new minimum capital requirement of N200 billion for national commercial banks. The lender did not disclose how the capital was raised.
Standard Chartered Bank
Standard Chartered Bank Nigeria also said in November last year that it had met the N200 billion capital threshold through support from its UK-based parent.
Ecobank Nigeria
Ecobank is also among the lenders that have crossed the recapitalisation hurdle, raising the minimum paid-up capital for a national bank.
Globus Bank
Globus Bank completed its capital requirement by raising N52.9 billion in 2024 to lift its capital to N98.6 billion, and followed in 2025 with a further N102 billion through rights issues and private placements. The raise, subscribed entirely by existing shareholders, took its capital above N200 billion.
Stanbic IBTC
Stanbic IBTC has equally scaled through the capital threshold set for national banks, as the lender raised N200 billion through a rights issue and a direct capital injection by its parent company.
PremiumTrust Bank
PremiumTrust Bank has met the N200 billion minimum capital requirement for National Commercial Banks ahead of the March 2026 deadline set by the Central Bank of Nigeria (CBN), becoming only the third national bank to do so.
The upstart lender, just three years old, exceeded the new capital requirement after wrapping up a rights issue and private placement with CBN sign-off in August, placing the bank among the early complaints to the new rule.
Providus Bank
Providus Bank also completed its recapitalisation, an exercise done through a sealed strategic merger with Unity Bank. This makes Providus–Unity the first approved merger under the CBN’s recapitalisation programme announced earlier in 2024.
Other banks that have met the new capital requirement include merchant banks such as FSDH Merchant Bank, Greenwich Merchant Bank, Nova Bank, and Rand Merchant Bank.
Non-interest banks are not left behind, as Jaiz Bank, Lotus Bank, and TAJBank have beefed up their capital ahead of the CBN deadline.
Matter arising over recapitalisation
While the largest banks have completed their recapitalisation programmes, the pressure has pivoted to Tier-2 and Tier-3 banks. DataPro’s recent outlook points to at least three potential mergers among mid-tier banks.
“Past consolidation efforts, such as those in 2005, highlight the potential pitfalls of IT system failures and cultural clashes. Particularly challenging is the merger of conservative Tier-1 banks with aggressive Tier-2 acquirers, which could cause decision-making gridlock and operational disruptions,” said Idris Shittu, an analyst expert on enterprise risk management for DataPro.
Rising interest rates, persistent inflation, and subdued liquidity have made standalone capital raising more expensive and less predictable. For smaller banks without strong retail franchises or diversified income streams, mergers are increasingly seen as the least disruptive route to survival. Yet consolidation comes with trade-offs.
“This regulatory push has spurred an active M&A environment, but it brings with it considerable risks. Post-merger integration challenges, including IT system harmonisation, cultural alignment, and the migration of Non-Performing Loans, could strain newly merged entities, especially among smaller banks. The looming deadline has also sparked ‘War Room’ discussions focused on deal execution and risk mitigation.”
As banks reposition, the sector faces what DataPro characterises as a convergence of three structural pressures. First is regulatory tightening. Nigeria’s 45 percent Cash Reserve Ratio continues to constrain liquidity, effectively locking away a significant share of banks’ deposits and limiting balance sheet flexibility.
Second is execution risk. Mergers bring challenges around asset quality, governance alignment, and technology integration. The Punch has previously reported concerns among analysts that poorly aligned mergers could expose acquiring banks to hidden non-performing loans.
Third is technological disruption. Fintech operators such as Moniepoint and Opay are steadily eroding banks’ dominance in payments and SME banking. Shittu warned that traditional lenders risk losing younger customers unless they accelerate digital innovation.
There is expected to be a shift in how Nigerian banks compete. Rather than operating solely as financial intermediaries, many are exploring platform-based models that embed lifestyle and commerce services into banking apps.
To bridge the gap, banks are increasingly weighing fintech acquisitions or the creation of standalone digital subsidiaries designed to operate outside traditional banking bureaucracy.
CBN governor’s determined will
The Central Bank of Nigeria, led by its Governor, Olayemi Cardoso, has sustained momentum around its vision of promoting regulatory excellence while reinforcing the foundations of Nigeria’s financial system. Central to this effort is the ongoing bank recapitalisation programme, which has already seen about 20 banks meet the new minimum capital thresholds. The exercise, analysts say, reflects the apex bank’s resolve to entrench a stronger, safer, and more resilient financial architecture that aligns with global standards and best practices.
At its core, the recapitalisation drive—being executed through fresh capital raising—aims to position the banking system to better absorb shocks, support economic growth, and safeguard depositor funds. Industry observers note that the emergence of larger and better-capitalised banks stands out as one of the most important expected outcomes of the initiative.
Under Cardoso’s leadership, the CBN has consistently emphasised that sustainable economic expansion cannot be achieved without a solid and dependable financial system. As a result, the regulator is focused on ensuring coherence between monetary and fiscal policies in order to advance the Federal Government’s growth agenda, including the long-term aspiration of building a $1tn economy.
For the apex bank chief, strengthening compliance culture and deepening risk-management frameworks are non-negotiable priorities. The CBN’s leadership, he has repeatedly stated, is committed to protecting the integrity of Nigeria’s financial sector while enhancing its resilience and credibility both at home and abroad.
Cardoso has assured stakeholders that the apex bank will insist on stronger corporate governance, enhanced transparency, and firmer accountability to safeguard funds raised through the exercise. He revealed that while several banks have already crossed the new capital thresholds, others are making steady progress and are well-positioned to meet the March 31, 2026 deadline without difficulty.
“Banks meeting or exceeding the new requirements is a clear testament to the depth, resilience, and capacity of Nigeria’s banking sector,” Cardoso stated.
In further support of these reforms, the CBN has established a dedicated Compliance Department, which is now fully operational. Its responsibilities span financial crime supervision, market conduct oversight, enterprise security, corporate governance, and Environmental, Social and Governance standards.
The CBN Credit Risk Management System has already been upgraded to a web-enabled platform, allowing banks and other stakeholders to directly access the database for statutory reporting and borrower status enquiries. In addition, the apex bank is integrating the CRMS with other banking systems to enhance efficiency and oversight.
A report by Deloitte titled “Nigeria’s macro headwinds trigger bank recapitalisation” estimates that the total funds to be raised by the end of the exercise on March 31, 2026, will amount to N4.14tn. The report noted that raising banks’ minimum capital from N50bn to as much as N500bn, depending on licence category, is a critical step toward strengthening capital adequacy within Nigeria’s financial industry.
According to Deloitte, Nigerian banks’ capital adequacy has come under pressure from macroeconomic challenges, including elevated inflation and interest rates, currency volatility, and foreign-exchange liquidity constraints.
“The upward revision will ensure that Nigerian banks have the capacity to take on bigger risks and stay afloat amid both domestic and external shocks. It also means increased liquidity position of banks, which will help broaden their loss-bearing capabilities,” the report stated.
With just a few months left before the recapitalisation programme concludes, the CBN governor disclosed that implementation remains firmly on course. “As we strengthen the capacity of our banks, stress-testing this year confirms that Nigeria’s banking sector remains fundamentally robust. Key financial soundness indicators overwhelmingly satisfied prudential benchmarks during the year,” Cardoso added.
Beyond capital adequacy, the apex bank is also reinforcing operational discipline to ensure that the financial system functions efficiently for all Nigerians. “Our starting point was a comprehensive, end-to-end review of the entire cash lifecycle: from production, to transportation, to distribution, and eventual access by consumers. This holistic assessment enabled us to address root causes rather than symptoms,” he explained.
Addressing bankers recently, Cardoso emphasised that the ethics and professionalism of bankers and treasurers remain under constant scrutiny. To strengthen market discipline, the CBN has introduced the FX Global Code for all authorised dealers and market participants, with the aim of ensuring full compliance with foreign-exchange regulations.
He urged the Chartered Institute of Bankers of Nigeria to play a leading role in promoting and demonstrating the highest professional standards within the industry.
“At the Central Bank, we have intensified surveillance of market activities to ensure compliance and eliminate bad actors who attempt to undermine the system. Together, we must build a market based on strong governance and transparency. As regulators, we will maintain a zero-tolerance approach to compliance violations,” he said.
Views of industry players
Expectedly, players in the banking and financial service sector consider the policy a gamechanger of some sorts.
Firing the first salvo, the Group Managing Director of United Bank for Africa, Mr Oliver Alawuba, described the CBN’s recapitalisation policy as both timely and necessary, noting that it positions the financial system to respond effectively to the needs of a growing and globally competitive economy.
According to Alawuba, the initiative is expected to enhance the banking sector’s resilience by strengthening its ability to withstand economic shocks such as inflation, currency volatility, and global geopolitical disruptions. He added that the policy would also place Nigerian banks in a stronger position to finance long-term economic transformation, including large-scale infrastructure and industrial projects.
Alawuba stressed that recapitalisation extends beyond mere regulatory compliance. Rather, he described it as a forward-looking strategy designed to equip Nigerian banks with the scale and sophistication required to support a trillion-dollar economy.
He explained that stronger capital buffers would enable banks to better support traditional sectors such as oil and gas, agriculture, and manufacturing, while also expanding financing for emerging areas including fintech, green energy, and infrastructure development.
“Nigerian banks need adequate capital buffers to meet the evolving demands of these sectors. Without this, the industry cannot effectively rise to the challenge,” he said.
“I am pleased to note that a significant number of banks have raised the required capital through rights issues and public offerings well ahead of the 2026 deadline. I believe that the banking sector is in a strong position to support Nigeria’s economic recovery by enabling access to credit for MSMEs and supporting investment in critical sectors of our economy,” he added.
Oyo State chairman of the Nigerian Economic Society (NES), Dr Alarudeen Aminu, said the current recapitalisation was aimed more at restoring the real value of banks’ capital rather than expanding their capacity.
“The recent recapitalisation has more to do with addressing the shortfall in the real value of the capital of our banks as a result of naira devaluation,” Aminu said.
He noted that while the Central Bank of Nigeria’s decision to raise minimum capital requirements was a positive step, recapitalisation alone would not guarantee financial system stability.
Aminu recalled that the 2004–2005 recapitalisation exercise exposed governance weaknesses in the sector, leading to fund diversion, excessive stock market speculation and eventual bank failures.
Also speaking, Acting Head of the Department of Banking and Finance, University of Ibadan, Dr Ifeayin Onwuka, said that strong capital buffers were essential for banks to withstand economic shocks and finance large-scale investments.
“Equity capital is a buffer. When a bank has robust capital, it can weather shocks much better than when it doesn’t,” Onwuka said.
The don explained that weak capitalisation previously limited Nigerian banks’ ability to undertake big-ticket transactions, adding that Nigeria’s aspiration of becoming a one-trillion-dollar economy required strong and globally competitive banks.
Source link
