Top Five Banks Face N1.5 Trillion Shortfall in Meeting CBN’s New Capital Requirements
The top five banks are grappling with a N1.5 trillion shortfall to fulfill the recently announced minimum capital base set by the Central Bank of Nigeria (CBN) for international commercial banks. In a statement released yesterday, the CBN revealed the new minimum capital requirements, significantly increasing the threshold for commercial banks with international authorization to N500 billion from the previous N50 billion.
Confirming this development in Abuja, the Acting Director of the Corporate Communications Department, Mrs. Hakama Sidi Ali, outlined the adjustments, stating that the minimum capital base for commercial banks with national authorization had risen to N200 billion, marking a 700 percent increase from N25 billion.
Furthermore, Mrs. Sidi Ali disclosed that banks with regional authorization now face a requirement of N50 billion, representing a 400 percent increase from N10 billion. Additionally, the minimum capital for merchant banks will be N50 billion, while non-interest banks with national and regional authorizations will require N20 billion and N10 billion, respectively.
In response to these changes, banks are expected to comply within 24 months, commencing from April 1, 2024, and ending on March 31, 2026. The CBN emphasized the necessity of enhancing banks’ resilience, solvency, and capacity to support Nigeria’s economic growth.
To facilitate compliance, banks are encouraged to explore avenues such as private placements, rights issues, mergers and acquisitions, and license upgrades or downgrades. The CBN stressed that the new capital requirement would comprise paid-up capital and share premium only, excluding Additional Tier 1 (AT1) Capital.
The CBN has also mandated all banks to submit an implementation plan outlining their strategies for meeting the new capital requirement by April 30, 2024. The regulatory body has vowed to monitor and ensure compliance with the new requirements within the specified timeline.
For the top five banks, including Access Bank, FirstBank, GTBank, UBA, and Zenith Bank, each is required to have a minimum capital base of N500 billion. However, Vanguard’s findings based on the latest financial results indicate a combined paid-up capital and share premium of N1.037 trillion, resulting in a significant shortfall of N1.472 trillion.
Access Corporation, the parent company of Access Bank, reported paid-up capital and share premium of N251.811 billion, leaving a shortfall of N248.189 billion. Similarly, FBN Holdings, the parent company of FirstBank, recorded paid-up capital and share premium of N251.3 billion, facing a shortfall of N248.66 billion.
GTHoldco, the parent company of GTBank, reported paid-up capital and share premium of N138.186 billion, with a shortfall of N361.814 billion. UBA reported paid-up capital and share premium of N115.815 billion, resulting in a shortfall of N384.185 billion. Lastly, Zenith Bank reported paid-up capital and share premium of N270.745 billion, facing a shortfall of N229.255 billion.
