As banks accelerate their efforts to meet the 2026 recapitalisation deadline, the Central Bank of Nigeria is poised to close the gap between the country’s monetary and fiscal policies, writes FELIX OLOYEDE
On March 28 of last year, the Central Bank of Nigeria set the capital base for financial lenders nationwide, highlighting its goal of enhancing banks’ ability to fund large-scale projects and drive economic activities critical to the government’s ambition of achieving a $1tn economy by 2030.
According to the Securities and Exchange Commission, in 2024, banks raised N2.2tn from the capital market. And this year, some lenders have launched fresh rounds of capital raise ahead of the 2026 deadline.
On course
Also, recently, Fitch affirmed that the local lenders were on track to meet the first quarter of 2026 deadline.
“The two largest banks, Access Holdings and Zenith Bank, are the first to secure enough fresh capital to meet the N500bn requirement for an international licence. First HoldCo, United Bank for Africa and Guaranty Trust Holding Company are taking a phased approach. They have recently raised capital and have shareholder approval to begin raising more to meet the N500bn requirement. First HoldCo’s and United Bank for Africa’s recent rights issues are awaiting final regulatory approval.
“Fidelity Bank and FCMB Group have completed initial capital raisings but will need to raise more to maintain their international licences. As second-tier banks, they must raise significantly more capital relative to their balance sheets than larger banks. They have extraordinary general meeting approval for this, although they could consider downgrading to a national licence as they each have just one foreign subsidiary.
Ecobank Nigeria Limited and Jaiz Bank needed only small capital injections to meet their requirements and have already achieved compliance. We estimate that ENG is still in breach of its total capital adequacy ratio requirement of 10 per cent, but it has further capital-raising plans to restore compliance. Stanbic IBTC Holdings has launched a rights issue to raise capital to maintain its national licence,” the rating agency explained in a release.
It added that the capital raisings were contributing to a recovery in capitalisation from the impact of naira devaluation, which put pressure on capital ratios and increased US dollar credit concentration risks, noting, “Strengthened buffers over minimum CAR requirements will mitigate risks from a challenging operating environment, including regulatory intervention and further naira volatility, while providing room for business growth.”
“The capital raisings are unlikely to lead to banks with Long-Term Issuer Default Ratings of ‘B-’ being upgraded, given the constraint of Nigeria’s ‘B-’/Positive Long-Term IDR. However, they could contribute to outlook revisions to positive for some banks, and, providing CAR compliance is restored, to upgrades for UBN and ENG (both rated ‘CCC’). Capital raisings are more likely to affect National Long-Term Ratings, which measure the relative creditworthiness of Nigerian issuers,” it enunciated.
Aside from bolstering banks’ capacity to finance hefty deals, the CBN Governor, Olayemi Cardoso, mentioned that the recapitalisation exercise would also enhance financial stability in the Nigerian economy and help mitigate global and domestic economic shocks.
After shoring up lenders’ assets, it will place them in a better position to extend credit to underserved sectors, boost investors’ confidence, promote economies of scale, cost savings, and improved efficiency within the banking sector.
The recapitalisation plan establishes minimum capital requirements of N500bn for commercial banks with international licenses, N200bn for those with national licenses, and N50bn for regional licensed banks.
It also specifies that merchant banks must have a minimum of N50bn capita, while non-interest banks with national licenses are required to maintain N20bn. Non-interest banks with regional licenses will now have a minimum capital requirement of N10bn.
“By enabling banks to extend more credit to MSMEs, we enhance job creation and productivity. Furthermore, with increased capital, banks can invest in technology and innovation, crucial for driving digital financial services such as mobile money and agent banking. These technologies are key to breaking down geographic and economic barriers, bringing financial services to even the most remote areas,” Cardoso stated.
Robust banking sector
Cardoso explained that the banking sector remained robust, with key indicators reflecting a resilient system.
“The non-performing loan ratio remains within the prudential benchmark of five per cent, showcasing strong credit risk management. The banking sector liquidity ratio comfortably exceeds the regulatory floor of 30 per cent, a level which ensures banks are maintaining adequate cash flow to meet the needs of customers and their operations. The recent stress test conducted also reaffirmed the continued strength of our banking system,” 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 said.
Deputy Governor, Corporate Services, CBN, Ms Emem Usoro, noted that the journey to $1tn economy required structured planning, clearly defined policies, unwavering implementation, and an inclusive approach that aligns public and private sector interests.
In her Keynote address in Abuja at a seminar organised by the CBN for business editors and financial correspondents, the deputy governor said that one of the key components of the $1tn ambition was the recapitalisation of Nigerian banks.
According to Usoro, banks must be sufficiently capitalised to meet the financial demands of a larger and more dynamic economy
“As we work towards building a $1tn economy, we must consider the recapitalisation of our banks to be able to fund, finance and power the economy, and to favourably compete globally,” she asserted.
She sought a collective effort from all stakeholders, adding that the financial system must be prepared to play its role in powering development.
“We should particularly pay significant attention to bank recapitalisation to ensure that our banks are strong, resilient and stable enough to carry out financial intermediation, and the much-needed financing of development projects and programmes,” Usoro said.
More so, the Director of the Banking Supervision Department at the CBN, Dr Olubuka Akinwumi, provided insights into the state of the banking sector.
He disclosed that banks had so far remained within the prudential thresholds stipulated by the regulator, including benchmarks for the capital adequacy ratio and non-performing loans.
“As we speak, all our banks are still within the prudential thresholds that were set. And they are actively pursuing various recapitalisation efforts,” Akinwunmi said.
He noted that mergers and acquisitions could happen organically as banks evaluate their standings and pursue strategic partnerships.
“Banks are currently focused on raising their own capital, but engagements are ongoing, and when the opportunities arise, they will be taken,” Akinwunmi added.
He confirmed a recent rise in bank licensing applications and approvals, adding that the apex bank remains committed to overseeing and supporting institutions aligned with the country’s development objectives.
According to Akinwumi, priority sectors such as agriculture, infrastructure, and manufacturing are receiving attention from both the government and financial institutions, as they are key to achieving a trillion-dollar economy.
“If you look at this year’s national budget, it reflects a clear emphasis on critical sectors like health, education, infrastructure and agriculture. Banks are taking cues from these priorities, recognising them as viable areas for business expansion,” he explained.
He mentioned that substantial progress had already been made regarding the recapitalisation.
“We are halfway through the journey in terms of timeline, and in terms of capital already raised, we are also at least halfway through. That is a positive signal.
“The emerging global economic shifts and pressures were not lost on the management of the CBN. We started early. If we had waited till now, the challenges would have been greater. But we acted in time,” he remarked.
Investors’ confidence boosted
The banking supervision director expressed confidence that the recapitalisation requirements would be met, stressing that existing shareholders’ funds continue to serve as a buffer, adding that the apex bank deliberately opted for fresh capital inflows, particularly from foreign investors who have shown renewed confidence in Nigeria’s financial system.
“International perception of Nigeria’s banking sector is improving. The reforms over the past year, especially around the foreign exchange regime and improved transparency regarding reserves, have boosted investor confidence,” he said.
He cited recent disclosures on Nigeria’s net reserves and improvements in regulatory credibility as key factors that were reshaping the outlook for foreign direct investment in the banking sector
On the loan-to-deposit ratio, Akinwumi explained that the current 50 per cent benchmark did not reflect a reluctance to lend but rather a contextual response to inflation and other macroeconomic challenges.
“As the macroeconomic environment stabilises, banks will naturally increase lending. It is a cautious approach to ensure that lending supports sustainable growth,” he opined.
He stated that the Cash Reserve Ratio had improved significantly in terms of transparency, adding that banks now have a clearer understanding of CRR computations, unlike in the past, which enhances predictability and compliance.
“A stronger bank can take on big-ticket businesses, including infrastructure financing. The current reforms, such as the infrastructure concessioning plans, present viable business opportunities for well-capitalised banks.
“Our examiners follow each capital trail meticulously, moving from one bank to another as necessary. Even if it’s not your bank under verification at that moment, we expect full cooperation to trace the sources of capital,” he emphasised.
Player views
The Group Managing Director of United Bank for Africa, Mr Oliver Alawuba, described the ongoing bank recapitalisation policy as both timely and essential in positioning the financial system to meet the demands of a growing and globally competitive economy.
According to the UBA boss, the initiative is expected to boost the resilience of the banking sector by strengthening its capacity to withstand economic shocks such as inflation, currency volatility, and global geopolitical disruptions.
He highlighted that the policy would bolster Nigerian banks’ capacity to finance the nation’s long-term economic transformation, including large-scale infrastructure and industrial projects.
Alawuba emphasised that the recapitalisation policy transcends regulatory compliance and represents a strategic initiative to position Nigerian banks to operate at the scale and sophistication demanded by a trillion-dollar economy.
He noted that the move would enhance the banking sector’s ability to support traditional economic drivers such as oil and gas, agriculture, and manufacturing, alongside emerging sectors like fintech, green energy, and infrastructure development.
“Nigerian banks require adequate capital buffers to address the evolving needs of these sectors. Without sufficient buffers, the industry cannot effectively meet these challenges,” he stated.
Alawuba also drew attention to the significant disparity between Nigerian banks and those in more advanced economies, where bank assets typically range between 70 to 150 percent of Gross Domestic Product. In Nigeria, as of 2024, bank assets accounted for merely 11.97 percent of GDP—a gap he identified as needing urgent resolution for the country’s financial system to meet international standards.
He praised the apex bank’s recent directive to increase minimum capital thresholds, calling it a timely acknowledgement of the necessity for robust financial institutions capable of addressing national priorities such as infrastructure growth, digital transformation, inclusive financial services, and economic diversification.
In conclusion, Alawuba asserted that a strong, well-capitalised banking sector is essential for Nigeria’s ambition to achieve a one trillion-dollar economy, and the recapitalisation initiative is a crucial step toward reaching that milestone.
