The Central Bank of Nigeria (CBN) has directed commercial, merchant, and non-interest banks with international authorisation to increase their capital base to 500 billion naira. For banks with national and regional authorisation, the new minimum capital requirements are 200 billion and 50 billion naira, respectively. The directive, issued by CBN Governor Olayemi Cardoso, aims to strengthen the banking sector against domestic and global economic challenges.
Banks have 24 months, starting from April 1, 2024, to meet the new capital requirements. The CBN stated the recapitalisation is necessary to support the government's goal of growing the economy to $1 trillion over the next seven years. The regulator emphasised that the move will enhance banks' resilience, solvency, and capacity to support economic growth.
The last major recapitalisation exercise in Nigeria occurred in 2004. The current policy permits banks to raise new capital through various means, including issuing new shares, seeking fresh injections, or through mergers and acquisitions. The CBN has clarified that the new capital base will be calculated using paid-up capital and share premium, not shareholders' funds.
