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The Central Bank of Nigeria has announced the increase in the capital base of commercial banks with international authorisation to N500 billion and national banks to N200 billion, while those with regional authorisation are expected to achieve a N50 billion capital threshold.
The Apex Bank through a statement signed by its Acting Director, Corporate Communications, Sidi Ali, in Abuja, on Thursday, also said that all banks are required to meet the minimum capital requirements within 24 months commencing from April 1, 2024, and terminating on March 31, 2026.
In the directives, the acting CBN Director, also said that the non-interest banks with national and regional authorisations will need to increase their capital to N20 billion and N10 billion, respectively.
The proposed increases in the capital base comes nearly two decades after the CBN’s 2004 banking reform, which increased the then-prevailing capital base from N2 billion to N25 billion.
The 2004 banking reform was characterised by massive mergers and acquisition activities, ultimately reducing the number of banks in the country from 89 to 25.
Recall that in November 2023, Cardoso, at the 58th Annual Bankers’ Dinner organised by the Chartered Institute of Bankers of Nigeria, announced plans by the apex bank to carry out a fresh round of banking recapitalisation for the Deposit Money Banks.
He said the policy was part of its efforts to strengthen its capacity to support Nigeria’s drive to become a $1tn economy by 2026.
“Attaining this target necessitates sustainable and inclusive economic growth at a significantly higher pace than current levels. It is crucial to evaluate the adequacy of our banking industry to serve the envisioned larger economy. It is not just about its current stability. We need to ask ourselves, can Nigerian banks have sufficient capital relative to the finance system needed in servicing a $1tn economy in the near future, in my opinion, the answer is no, unless we take action. As a first test, the central bank will direct banks to increase their capital.”
A circular signed by the Director, Financial Policy and Regulation Department, Mr. Haruna Mustafa, to all commercial, merchant, and non-interest banks and promoters of proposed banks emphasised that all banks were required to meet the minimum capital requirement within 24 months commencing from April 1, 2024, and terminating on March 31, 2026.
To enable them to meet the minimum capital requirements, the CBN urged banks to consider injecting fresh equity capital through private placements, rights issues and/or offers for subscription, Mergers and Acquisitions, and/or upgrade or downgrade of license authorisation.
The circular disclosed that the minimum capital shall comprise paid-up capital and share premium only. It stressed that the new capital requirement shall not be based on the Shareholders’ Fund.
However, it said that the promoters of such proposed banks would make up the difference between the capital deposited with the CBN and the new capital requirement no later than March 31, 2026.
