The Central Bank of Nigeria (CBN) has announced an upward review of the minimum capital requirements for commercial, merchant and non-interest banks in Nigeria.
All existing banks are required to meet the minimum capital requirement within a period of 24 months commencing from April 1, 2024 and terminating on March 31, 2026.
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For commercial banks with international authorisation, the minimum capital is now ₦500 billion. Commercial banks with national authorisation will require a minimum capital of ₦200 billion, while those with regional authorization will require ₦50 billion.
On the other hand, Merchant banks with national authorization will require a minimum capital of ₦50 billion.
Non-interest banks with national authorization require ₦20 billion while those with regional authorization require ₦10 billion.
The Apex bank made the announcement in a circular released on Thursday.
To meet the minimum capital requirements, the Apex bank advised the banks to consider any of the following options:
- Inject fresh equity capital through private placements, rights issue and/or offer for subscription.
- Mergers and Acquisitions (M&As), and/or
- Upgrade of downgrade of license authorization.
For existing banks, the minimum capital specified above shall comprise paid-up capital and share premium only. The new capital requirement shall not be based on Shareholders’ Fund.
Notwithstanding the capital increase, existing banks are to ensure strict compliance with the minimum capital adequacy ratio (CAR) requirement applicable to their license authorisation.
The new capital requirement shall be applicable to all new applications for banking license submitted after April 1, 2024. For the new banks, the minimum capital requirement shall be paid-up capital.
Finally, all banks are required to submit an implementation plan for meeting the new capital requirement to the Apex bank.
The CBN said that the prevailing macroeconomic challenges and headwinds occasioned by external and domestic shocks have made the capital raise necessary.
The last time the CBN increased capital base for banks was in 2005. The capital base rose from ₦2 billion to ₦25 billion.
CBN Governor, Olayemi Cardoso had hinted in November 2023 that commercial banks in the country would be directed to increase their capital base to service a $1 trillion economy ambition of the President Bola Tinubu administration.
Nnamdi Maduakor is a Writer, Investor and Entrepreneur
