The Central Bank of Nigeria (CBN) has increased the capital base for commercial banks in Nigeria.
This sweeping financial reform, announced on Thursday, March 28, 2024, mandates substantial increases in the minimum capital base for banks, varying by the scope of their operations.
The latest policy directive specifies that commercial banks with international authorization are now required to shore up their capital base to 500 naira and national banks to N200 billion.
The CBN’s Acting Director of Corporate Communications, Mrs. Hakama Sidi Ali, confirmed the policy shift in Abuja.
The CBN did not overlook merchant banks, which are now subject to a 50 billion naira minimum capital requirement.
Furthermore, non-interest banks with national and regional authorizations will need to bolster their capital to 20 billion and 10 billion naira respectively.
The CBN also emphasized that all banks are required to meet the minimum capital requirement within 24 months commencing from April 1, 2024, and terminating on March 31, 2026.
In the categorisation, Mega Banks which are required to increase to 500 billion naira are those that operate all over Nigeria and Internationally.
Smaller Commercial Banks which are to shore up their base to 200 billion naira are the ones that operate all over the country only.
Regional Banks which operate in some parts of the country only are to shore up to 50 billion naira.
The new capital requirement will consist solely of paid-up capital and share premium, meaning Shareholders funds will not considered.
According to the circular, to meet the minimum capital requirements, the CBN has urged banks to consider injecting fresh equity capital through private placements, rights issues, and/or offers for subscription; to pursue Mergers and Acquisitions (M&As); and/or to consider upgrading or downgrading their license authorisation.
In the meantime, the CBN requires all banks to submit an implementation plan, clearly indicating their chosen methods for meeting the new capital requirement and detailing the various activities and their timelines, by no later than April 30, 2024.
The CBN also announced that it would monitor and ensure compliance with the new requirements within the specified timeframe.
The last recapitalisation policy happened 19 year ago during the tenure of Professor Charles Soludo as the CBN governor when the capital base was increased to 25 billion naira, leading to mergers, acquisition and licence loses of some operating banks that failed to meet the new requirements.