Days after urging Nigerian banks to expedite the recapitalization of their capital base to fortify the financial system, the Central Bank of Nigeria (CBN) unveiled new minimum capital requirements on Thursday, March 28, 2024. The minimum capital base for commercial banks with international authorization is now set at N500 billion. Confirming this development in Abuja, Mrs. Hakama Sidi Ali, Acting Director of the Corporate Communications Department, disclosed that the minimum capital base for commercial banks with national authorization is N200 billion, while those with regional authorization must have N50 billion. Additionally, merchant banks are required to maintain a minimum capital of N50 billion, and non-interest banks with national and regional authorizations must have N20 billion and N10 billion, respectively.
A circular signed by Mr. Haruna Mustafa, Director of the Financial Policy and Regulation Department, reiterated to all commercial, merchant, and non-interest banks, as well as promoters of proposed banks, that they must meet the minimum capital requirement within 24 months, starting from April 1, 2024, and ending on March 31, 2026. This move, initially mentioned by CBN Governor Olayemi Cardoso during the Annual Bankers’ Dinner in November 2023, aims to bolster banks’ resilience, solvency, and ability to support Nigeria’s economic growth.
To meet the new capital requirements, banks are encouraged to consider injecting fresh equity capital through private placements, rights issues, mergers and acquisitions (M&As), or upgrading/downgrading license authorizations. The circular clarified that the minimum capital shall comprise paid-up capital and share premium only, with Additional Tier 1 (AT1) Capital ineligible. Banks breaching the Capital Adequacy Ratio (CAR) requirement will be required to inject fresh capital to rectify their position.
Proposed banks must meet the minimum capital requirement of paid-up capital, with the new requirements applicable to all new banking license applications submitted after April 1, 2024. Pending applications with a capital deposit or Approval-in-Principle (AIP) will be processed, with promoters required to bridge the gap between the deposited capital and the new requirement by March 31, 2026.
Furthermore, all banks must submit an implementation plan outlining their chosen options and activities to meet the new capital requirement by April 30, 2024. The CBN will monitor and ensure compliance with the new requirements within the specified timeline.
