* Analysts Demand Progress Report On 12 Lenders
* CBN’s Resolve Against Intervention Programmes Unsettles Industry
With about two months to the expiration of March 31, deadline for banks to meet the new capital requirements, analysts and economic watchers are asking how the three banks under the management of the Central Bank of Nigeria, (CBN), Polaris, Keystone and Union, since January 2024, would be recapitalised to the new minimum requirements, (MCR).
From the street, (FTS) Metrobusinesnews.com, (MBN) gathered that, similarly, about 12 other banks that are yet to meet up with the new MCR, are becoming somewhat jittery, and may be forced to embrace the only available options of either forced merger or scaling down operations with its attendant challenges.
However, the situation is heightened by recent announcement by CBN of its resolve to jettison intervention programs, following alleged abuses by the past administration, particularly, the immediate one that made the program drain pipes on the economy is ubsettling the industry.
This is because they argue that the implication of CBN’s resolution is that it will nolonger commit public funds either as bailout or forebearance to any lender.
Yemi Cardoso, CBN governor, speaking after the last Monetary Policy Committee (MPC) meeting for last year said earlier interventions dating back to 2010 amounted to N10.93 trillion, out of which N4.69 trillion remains unpaid, limiting CBN’s ability to deploy unorthodox policy measures to support the economy, even, if there was need for non-conventional approach.
Cardoso said the humongous amount is weighing on the bank’s capacity to engage in new intervention programs, noting that his administration has been able to recover about N2 trillion.
Analysts are worried that the ugly incident may have given CBN justifiable reasons not to commit taxpayers’ funds into the embattled banks, raising doubts on their bouncing back as major players in the industry.
“I think it’s important to give context, because it is oftentimes very, well misunderstood. Now we did a survey, a small study of interventions in the central bank, and we came out with certain numbers, which showed that interventions came to total amount of N10.93 trillion… Now out of that… we still have outstanding of N4.69 trillion, which represents about 43 per cent of those interventions. Since we have come, we have been able to rein back about N2 trillion,” he said, in Abuja, after the meeting.
Describing the unpaid portion as “a humongous amount of money” that “really and truly ties our hands in terms of additional interventions, Cardoso said his administration would tread with caution, adding that it does not make sense for an administration to embark on a direction that could easily destabilize an economy, as indeed happened in the past.
Link to $1 Trillion Economy Vision
Nigeria’s banking sector is undergoing one of its most far-reaching reforms in decades as deposit money banks race to raise an estimated N4.14 trillion in fresh capital ahead of the March 31, deadline, according to a report by global professional services firm, Deloitte.
The recapitalisation exercise, initiated by CBN) in April 2024, is designed to strengthen the financial system, enhance resilience against macroeconomic shocks, and position Nigerian banks to support the country’s ambitious target of building a $1 trillion economy by 2030.
Consequently, International banks, are to recapitalise to the new threshold of ₦500 billion; National banks, ₦200 billion; Regional banks, ₦50 billion; Merchant banks, ₦50 billion; Non-interest banks, ₦20 billion (national) and ₦10 billion (regional).
Beyond financial stability, the recapitalisation drive is seen as a critical enabler of Nigeria’s long-term growth ambitions, with Cardoso noting that the existing capital base of Nigerian banks would be insufficient to service a $1 trillion economy without decisive reforms.
“A well-capitalised banking system is essential if we are to fund large-scale infrastructure, industrial projects, and the expansion of credit to MSMEs,” he said.
Analysts’ Perspectives
As banks intensify capital-raising efforts ahead of the deadline, analysts say the success of the recapitalisation programme will not only determine the future strength of Nigeria’s banking sector but also its capacity to drive sustainable economic growth in the years ahead.
It is against this backdrop that some analysts are becoming apprehensive about the unusual quietness at the three banks in particular as far as recapitalisation is concerned.
More worrisome is the fact that officials of the banks have continued to maintain sealed lips amid progress being made by other lenders, with the assistance of shareholders and other stakeholders, including their boards, which are currently lacking with them.
The analysts were unanimous in their submissions that mergers and acquisition may be the inevitable options for some lenders, particularly, those in the national, Tier-3, as well as those in specialised categories
Some banks, however, are opting for strategic realignments rather than outright mergers. Nova Bank, for instance, has downgraded its licence to a regional banking licence, which carries a lower minimum capital requirement of N50 billion. Some othe lenders are exploring the option.
Among Nigeria’s 14 national banks, the recapitalisation strategies of Keystone and Polaris Banks remain unclear, with no definitive public disclosures on how they intend to meet the new capital thresholds. The story is not so different with Union bank.
According to SBM Intelligence, consolidation will be a defining feature of the banking landscape in 2026, driven largely by capital shortfalls across parts of the sector.
The firm noted in its 2026 Outlook Report that “a forced round of mergers and acquisitions will occur due to the banking recapitalisation deadline, with some banks failing to meet requirements.”
Beyond capital adequacy, SBM also projects that the CBN will further tighten prudential, risk management, and anti-money laundering (AML) regulations. This reflects the regulator’s broader push to strengthen financial system stability and align Nigerian banks more closely with global supervisory standards.
Incidentally, this recapitalisation period is bedevilled by rising interest rates, persistent inflation, and subdued liquidity, which have made standalone capital raising more expensive and less predictable.
Consequently, the analysts say, for smaller banks and their likes without strong retail franchises or diversified income streams, mergers are increasingly seen as the least disruptive route to survival.
MBN gathered that, indeed, the regulatory push has spurred an active M&A environment, with its accompanying post-merger integration challenges, including IT system harmonisation, cultural alignment, and the migration of Non-Performing Loans with the possibility of straining newly merged entities, especially among smaller banks.
As they reposition, the sector faces what DataPro characterises as a convergence of three structural pressures:
First is regulatory tightening. Nigeria’s 45 percent Cash Reserve Ratio continues to constrain liquidity, effectively locking away a significant share of banks’ deposits and limiting balance sheet flexibility.
Second is execution risk. Mergers bring challenges around asset quality, governance alignment, and technology integration. The analysts foresee poorly aligned mergers exposing acquiring banks to hidden non-performing loans.
Third is technological disruption. Fintech operators such as Moniepoint and Opay are steadily eroding banks’ dominance in payments and SME banking, with the possibility of traditional lenders losing more of their younger customers unless they accelerate digital innovation.
To bridge the gap, some banks are increasingly weighing fintech acquisitions or the creation of standalone digital subsidiaries designed to operate outside traditional banking bureaucracy with the attendantadditional costs that may erode some expected benefits of consolidation.
MBN further gathered that with about 12 banks still struggling with recapitalisation challenges, some banks may have been exposed, with some analysts projecting three bank mergers this year.
This projection was made by the rating firm, DataPro, in its 2026 Banking Sector Prospects in Nigeria, as it also highlighted some of the threats to the sector.
Analysing the banking sector prospects for 2026, DataPro’s in-house expert and analyst on Enterprise Risk Management, Idris Shittu, posited, “By the end of 2025, major banks will have successfully met the minimum capital threshold required by the Central Bank of Nigeria. Meanwhile, Tier-2 banks are under increasing pressure to comply, with three significant mergers expected by early 2026 as institutions scramble to meet the 31 March recapitalisation deadline.
The ERM expert anticipates that banks would continue to prioritise fee-based income streams over traditional lending activities to deal with the 45 per cent Cash Reserve Ratio for commercial banks. This CRR effectively sterilises nearly half of the naira deposits and severely limits liquidity.
On the outlook for the sector in 2026, Shittu projects a decline in the number of banks in the country, saying, “By the end of 2026, the Nigerian banking industry is expected to consolidate significantly, shrinking in number. While this consolidation promises a more resilient banking system capable of underwriting larger transactions and supporting Nigeria’s ambition toward a $1tn economy, integration risks loom large.
He warned that success in the consolidation phase will depend heavily on effective due diligence around asset quality and cultural fit, as well as robust post-merger integration planning.
PwC, which listed the finance sector as one of the sectors to drive growth in 2026 in its Nigeria Economic Outlook – January 2026, holds a more optimistic view of the sector.
PwC said, “Regulatory initiatives such as bank recapitalisation mandates and evolving frameworks for fintech and digital financial services are further drawing institutional interest, while secondary listings by major banks on international exchanges demonstrate growing cross-border investor engagement and confidence.
“In 2026, strong demand for modern financial products, credit expansion, and advanced risk management solutions, combined with projected capital market growth to N262tn, driven by anticipated listings of Dangote Refinery and NNPC, will deepen liquidity, attract new investors, and sustain interest across banking, fintech, and insurance.”
Why The Unusual Silence At The Banks Matters
CBN, in January 2024 sacked the boards and management of Keystone, Polaris and Union banks, citing infractions ranging from corporate governance failure to involvement in activities that pose a threat to financial stability.
The apex bank threatened the players then that it may revoke the licence of any bank that fails to fulfill or comply with any condition to which the licence was granted or if the bank is involved in a situation that is a threat to financial stability.
Consequently, since January 11, 2024, the banks have not had the privilege of being run by the full compliments of the boards and management, as in other banks, but, under the CBN interim management, development that is at variance with the policy pronouncements of the authorities
Understandably, Keystone and Union of the three embattled banks, are now under the full grips of the federal government, through CBN.
Analysts are concerned that, with CBN divesting itself of direct intervention programs of the economy, it then raises the moral questions of using public funds to recapitalise the banks. FTS gathered that the patronage of the banks have been limited since the takeover, raising questions on their ability to meet the capital requirements.
Similarly, the fact that CBN had also ruled out forbearance, demonstrated by last year’s compulsory repayment of the Covid-19 facilities to alleviate the lockdown induced crisis, for which analysts have continued to applaud CBN as the affected banks were barred from dividend payout, is seen as another pointer to the apex bank’s unwillingness to commit public funds into their recapitalization.
Friday Ameh, Lagos based analysts noted that the use of public funds to bail out banks can create a moral hazard, and at variance with the principle of free market or private sector driven economy.
While the two banks, in particular, Union and Keystone, are savouring the ownership change, the question remains as to how and who recapitalises them amid controversial mergers and acquisition exercise by the former.
“Government’s involvement may lead to a lack of accountability and transparency, potentially creating an environment conducive to the reasons advanced by CBN for sacking their boards and management in the first place,” Ameh added.
Analysts say although, the banks may have decided to keep progress from the public as they claim, it may jeopadise, what CBN may be planning, they may possibly need forbearance for the next phase of their existence.
Consequently, they noted that the need to maintain clean records of liquidation and also, possibly, for political considerations, CBN, will ensure that the banks and indeed others survive by all means, either through acquisition, mergers and scaling down of operations.
MBN gathered that CBN is weighing all possible options at ensuring their survival, if for nothing else, but political expediency, as it continues to monitor competition between local and international investors for strategic stakes in the banks and others still short of recapitalisation targets.
Union Bank:
The lender had enjoyed peace and large patronage as a member of the elite tier one banks then until Atlas Mara, a former investor and African investment vehicle co-founded by Bob Diamond, sold its significant stake, which it had gradually built, to Titan Trust Bank (TTB) in 2022. Since then peace had continued to elude it, in spite of the adoption of private ownership few years ago after Titan Trust Bank, its majority shareholder, acquired the stakes of other shareholders, causing the lender to delist its shares from the Nigerian Exchange.
According to Proshare, a consortium from the Arabian Peninsula and another with European banking links are among the leading bidders for one of Nigeria’s oldest banks, with the CBN reportedly open to a foreign strategic investor that engenders confidence, market credibility and boost regulatory confidence
However, the development is based on the understanding that the lingering legal dispute involving a former core investor, TGI Group is possibly resolved this month to pave way for complete capital restructuring.
Keystone Bank:
There are indications that the pasts are still hunting and hurting some of the banks, a development that may require the full intervention of the owners, the federal government, through CBN.
MBN gathered that CBN is irrevocably committed to the survival of all the banks, taking into consideration losses incurred by some stakeholders. But, it was further gathered that CBN is also committed to the prosecution of the sale of the banks, with the hope of ensuring that, the culprits, both within and outside federal government establishments are made to face the full weight of the law.
Proshare’s Economic & Market Intelligence Unit (EMIU), noted that “competing investor interest includes a local consortium seeking preferred-bidder status. While local investors’ capacity to raise capital independently remains questionable, market awareness of foreign investors’ interest suggests a possible joint acquisition.”
Polaris Bank:
The bank is said to be exploring possible potential mergers to meet the new capital requirement. While the bank is also believed to be pursuing investor-led recapitalisation, it is looking at the direction of another Tier-2 bank, according to EMIU suggests being Wema Bank, a move analysts view as supportive of broader industry consolidation and institutional strengthening.
The Economic & Market Intelligence Unit (EMIU) notes that the CBN appears receptive to mergers and acquisitions involving banks with marginal or negative shareholder funds as a strategic pathway to building larger, more resilient institutions. While domestic investors continue to express interest in distressed banks, capacity constraints on independently meeting unencumbered capital requirements suggest that strategic foreign partnerships may be necessary.
“For banks listed on the Nigerian Exchange Limited (NGX), capital-raising outcomes have varied. With under three months remaining to the deadline, most Tier-1 and Tier-2 banks have met revised capital buffers. However, Tier-3 banks are in a race to avoid forced combinations and remain relevant in the post-recapitalisation landscape,” EMIU said.
Established in 2018 as a bridge bank, it took over the assets and liabilities of the defunct Skye Bank after the CBN found some “unacceptable corporate governance lapses as well as the persistent failure of Skye Bank PLC to meet minimum thresholds in critical prudential and adequacy ratios.”
The CBN, in a joint decision with AMCON, in October 2022 announced the sale of Polaris Bank to Strategic Capital Investment Limited (SCIL) for N50 billion, requiring SCIL to repay the N1.3 trillion lifeline the CBN injected into the bank in the four years before its acquisition. However, less than two years, in January, 2024, CBN, took over its management, alongside the other two banks.
Most Vulnerable Banks
With almost all the tier one banks haven met the MCR, the most vulnourable lendes are the national financial institutions at the risk of forced mergers
Commenting on the CBN’s decision to avoid intervention programs and the possible impact on the industry, Victor Ogiemwonyi, retired investment banker, responding, to MBN’s inquiry last November, said, “CBN’s decision to refrain from direct intervention is the right decision. They can use banks with the expertise, to lend to areas they want to intervene and get accountability from them, instead of directly intervening. The banks yet to complete their recapitalisation, have some months to do that…in the event, some are unable to raise enough capital, they can down grade …eg, an international bank, becoming just a national bank…besides, the M&A route is open to them.”
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Beyond Capital: Tighter Prudential and AML Scrutiny
The paradox of Nigeria’s banking industry is that on paper it appears profitable, yet in reality it is fragile. In 2024, the top five lenders declared after-tax profits that surged more than 270 percent year-on-year. But by the first quarter of 2025, that growth had evaporated, slowing to a meager 0.74 percent. The supposed windfall profits were largely a mirage created by the naira’s freefall, which inflated the value of foreign currency holdings on paper. These were not profits born of efficiency, innovation, or stronger lending; they were accounting artifacts. The Central Bank of Nigeria (CBN), seeing the danger, stepped in to block banks from paying out these revaluation gains as dividends, insisting they be held as buffers against future shocks. That intervention exposed the hollowness of the profit’s narrative.
The recapitalisation push is the clearest sign yet of the sector’s fragility. With less than three months to the March 31, 2026, deadline, metrobusinessnews.com gathered that about 22 banks may have so far scaled the recapitalisation hurdle, leaving over 12 lenders still scrambling to raise funds in a market already skeptical of their true value, until recent developments
Some analysts argue that if Nigerian banks were genuinely as profitable and resilient as they claimed, they would not be racing to the nation’s capital markets, scrambling for fresh equity to meet the CBN’s new recapitalisation thresholds. Or better still that the percentage of numbers that have either met or surpassed the new threshold would have been more and the discerning banking public would have been saved of the inherent contradictions between paper profits on one hand and the current scrambling for fund raising on the other.
As at late last year, 27 banks were believed to have accessed the capital market, through public offers and rights issue, with 16 said to have met or exceeded the new benchmarks.
According to Cardoso, the stress test conducted last year showed that the banking system remained fundamentally robust, with key fundamental soundness indicators meeting prudential standards across the board.
Lessons From Collapse Of Aso Savings and Loans In December, 2025
On December 16, the Central Bank of Nigeria (CBN) revoked the operating licences of Aso Savings and Loans Plc and Union Homes Savings and Loans Plc, bringing to an abrupt end the operations of two mortgage institutions for failing to meet the minimum regulatory requirements.
According to CBN, both lenders were critically undercapitalised and had fallen short of the minimum paid-up share capital required to retain their licenses. Their capital adequacy ratios, the CBN added, were far below the prescribed threshold.
In a report by BusinessDay, the medium observed the intriguing aspect, particularly, for Aso Savings,for which the timing of the collapse stunned many investors.
According to the paper, the announcement was made only weeks earlier, the bank’s stock had delivered one of the strongest rallies on the Nigerian Exchange for the year. Specifically, between October 21 and November 3, the share price jumped by 114 per cent, rising from 50 kobo to N1.07, placing the lender among the few triple-digit gainers on a year-to-date basis.
Unfortunately, the surge was completely erased, with the revocation of its licence, the bank’s shares permanently suspended from trading, effectively wiping out its estimated N15.8 billion market capitalisation.
A Balance Sheet Already Broken
A closer look at Aso Savings’ unaudited nine-month results for 2025 showed that the collapse had long been in the making.
In the first nine months of 2025, the bank reported a net loss of N400 million, reversing a profit of N230.5 million recorded in the same period of 2024. But the income statement masked a far deeper crisis evident on the balance sheet.
By September 2025, customer deposits stood at N23.9 billion, almost equal to the bank’s gross loan book of N23.6 billion. More alarming was the quality of those loans. The lender had set aside N13.9 billion as provisions for credit losses, a figure that points to widespread impairment across its loan portfolio.
Liquidity was virtually non-existent. Cash at hand amounted to just N3.3 million, while net cash and bank balances were negative, reflecting overdrafts and obligations to other financial institutions. In effect, the bank had no meaningful liquidity buffer.
Although management reduced negative net assets from N62.8 billion at the start of the year to N51.6 billion by September, the improvement offered little reassurance. Shareholders’ funds remained deeply in deficit at N51.6 billion, underscoring the extent to which accumulated losses had eroded equity.
The CBN’s action raises a stark question for Aso Savings’ roughly 8,500 shareholders.
In bank liquidations, the hierarchy of claims is clear and unforgiving. Depositors are prioritised, followed by other creditors. Shareholders rank last and only receive any value if assets exceed liabilities.
As of September 30, 2025, total assets stood at N26.6 billion, against total liabilities of N78.2 billion, leaving a negative net asset position of N51.6 billion. Even if all assets were sold at book value then, proceeds would still fall tens of billions of naira short of what the bank owed.
The fall of Aso Savings is a sobering reminder that sharp stock market rallies can mask deep structural weaknesses Sand that when a bank’s fundamentals finally give way, the destruction of value can be swift and total.
