In response to the Central Bank of Nigeria’s (CBN) recent announcement of revised minimum capital requirements, Nigerian banks are bracing themselves for a substantial recapitalisation challenge, estimated at a staggering N4.7 trillion.
The CBN’s directive, issued on March 28th, mandates commercial banks with international licenses to maintain a minimum capital base of N500 billion, while those with national and regional licenses must have N200 billion and N50 billion respectively. Similarly, merchant banks are required to meet a minimum capitalisation of N50 billion, and non-interest banks must have N20 billion for national licenses and N10 billion for regional licenses.
Findings from audited and unaudited financial reports of 12 prominent banks on the Nigerian Exchange Limited reveal a significant funding gap of N2.8 trillion. Additionally, estimates suggest that banks outside the exchange face an additional N1.9 trillion shortfall.
Despite some banks, such as Zenith Bank and UBA, boasting substantial retained earnings, concerns linger over the treatment of these earnings in meeting the new capital requirements. Industry analysts anticipate further clarifications from the CBN regarding this matter as the implementation period unfolds.
The recapitalisation exercise was set to commence from April 1, 2024, through March 31, 2026, stakeholders, including the Association of Corporate & Marketing Communication Professionals of Banks (ACAMB), have assured depositors and shareholders not to panic.
ACAMB emphasises the soundness of Nigerian banks and their capability to meet the new capital base, citing the depth of the Nigerian capital market and the extended timeline provided by the CBN.
As Nigerian banks navigate this significant regulatory challenge, the overarching aim remains to strengthen the banking sector’s capacity to support the country’s economic growth and competitiveness on both domestic and global fronts.
