With the deadline at March 31, 2026, Nigerian banks have limited options to meeting the N20 billion N50 billion N200billion and N500billion new requirements for banks and non interest bank financial institutions.
Specifically, the new capital requirement will consist solely of paid-up capital and share premium.
This means Shareholders’ Fund will not be 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.
Additionally, the circular revealed that the minimum capital will consist solely of paid-up capital and share premium. It emphasized that the new capital requirement would not be based on the Shareholders’ Fund.
“Additional Tier 1 (AT1) Capital will not be eligible for meeting the new requirement. Despite the increase in capital, banks must ensure strict compliance with the minimum Capital Adequacy Ratio (CAR) requirement applicable to their license authorisation,” the circular stated.
It added that banks falling short of the CAR requirement would be mandated to inject fresh capital to rectify their standing.
For newer banks, the circular stated that the minimum capital requirement for proposed banks would be the paid-up capital.
The new minimum capital requirement will apply to all new applications for banking licenses submitted after April 1, 2024.
The circular also mentioned that the CBN would continue to process all pending applications for banking licenses where a capital deposit has been made and/or an Approval-in-Principle (AIP) has been granted.
Nonetheless, it stipulated that the promoters of such proposed banks must cover the difference between the capital deposited with the CBN and the new capital requirement by no later than March 31, 2026.
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.
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CBN also announced that it would monitor and ensure compliance with the new requirements within the specified timeframe.
However, based on the banks’ 2023, 9 months results, all the banks fall short of N500 billion capital in respect to their share premium and ordinary share capital.
Based on CBN’s categorization along the lines of international, national and regional banks, institutions like Fidelity Bank, which just acquired a Union Bank UK and FCMB would need to put extra efforts to meeting the new requirements of N500 billion share capital.
According to CBN, “Mega Banks (Operate all over Nigeria and Internationally) – N500 billion
Smaller Commercial Banks (Operate all over the country only) – N200 billion
Regional Banks (Operate in some parts of the country only) – N50 billion
Merchant Banks – N50 billion
Non-interest Banks (Operating all over Nigeria and internationally) – N20 billion
Non-interest Banks (Operate in the country only) – N10 billion.”
