Market News

By Felix Oloyede

As the ongoing recapitalisation of the banking sector reaches a crucial stage, eight lenders have met their targets ahead of the March 2026 deadline. This exercise has reinforced the stability of the banking sector, writes FELIX OLOYEDE

When the Central of Nigeria on March 28, 2024, announced a two-year bank recapitalisation exercise which commenced on April 1, 2024, many saw it as a tall order. Many viewed this initiative as a challenging task. However, just over a year later, eight lenders have successfully met their recapitalisation targets.

Access Holdings, Zenith Bank, Stanbic IBTC, Wema Bank, Lotus Bank, Jaiz Bank, Providus Bank and Greenwich Merchant Banks are the lenders that achieved their various new capital targets.

The accomplishment of these lenders showcases the resilience of the country’s banking sector and the stability the sector is currently enjoying.

Members of the Monetary Policy Committee of the CBN recently affirmed the banking system’s sustained stability, citing consistent Financial Soundness Indicators and anticipating further reinforcement through the ongoing recapitalisation programme.

The Policy Advisory Council report on the national economy aimed to attain a Gross Domestic Product of $1tn, outlining clearly defined priority areas and strategies.

A well-capitalised banking sector is widely regarded as essential for achieving the GDP growth plan. Therefore, the Governor of the CBN, Olayemi Cardoso, advised banks to prepare for a new round of recapitalisation to ensure they possess the necessary capital to support economic growth.

Cardoso quizzed: “Will Nigerian banks have sufficient capital relative to the financial system’s needs in servicing a $1tr economy in the near future? In my opinion, the answer is “No!” unless we take action. That action was the ongoing recapitalisation of banks, meant to prepare them for expansion and attract big-ticket transactions to support economic growth.”

While the recapitalisation exercise continues, the apex bank firmly reassured the public, depositors, and stakeholders that the Nigerian banking sector remains resilient, safe, and sound.

“The CBN affirms that it continues to monitor all financial institutions under its regulatory purview and maintains robust frameworks for early warning signals and risk-based supervision. These mechanisms ensure that any emerging issues are promptly addressed to protect the integrity of the financial system,” it said.

The CBN remains committed to maintaining a secure and resilient banking environment, ensuring depositors can trust the safety of their funds. It continuously monitors and refines its strategies to protect the financial interests of Nigerians and other stakeholders within the financial ecosystem.

In line with its mandate under the 2007 CBN Act to promote financial system stability, the apex bank strengthens the sector through ongoing reforms, expanded access to finance, institutional capacity building, and the enforcement of sound corporate governance practices.

Financial analysts emphasise that maintaining financial and banking system stability is crucial, as the collapse of financial institutions—especially banks—can erode public trust, trigger unexpected contractions in money supply, dampen savings and investment, and disrupt the payment system, with severe implications for the broader economy.

Furthermore, financial system stability is vital to the an effective transmission of monetary policy. Its attainment enables monetary authorities to pursue their primary objective of price stability with greater precision and reliability.

To uphold financial and banking system stability, the CBN has, at various times, implemented a range of reforms designed to strengthen the performance and resilience of the banking sector.

The recapitalisation, which commenced on April 1, 2024, requires minimum capital of N500bn, N200bn, and N50bn for commercial banks with international, national, and regional licences, respectively.

Merchant banks will require a minimum capital of N50bn; non-interest banks with a national licence will need N20bn, while those with a regional licence will have a minimum capital of N10bn.

Cardoso had said the ongoing recapitalisation policy not only reinforced financial stability but also served as a driver of inclusive economic growth.

“By empowering banks to extend more credit to MSMEs, we stimulate job creation and boost productivity. Increased capital also enables banks to invest in technology and innovation—key enablers of digital financial services such as mobile money and agent banking. These solutions help bridge geographic and economic gaps, bringing financial services to underserved and remote communities,” he noted.

Cardoso stressed that Nigeria possesses the potential to expand financial inclusion and support broad-based economic growth. He added that the recapitalisation initiative would further align with the government’s vision of building a $1tn economy.

The apex bank reaffirmed its position, describing banking sector recapitalisation as a key catalyst for realising the country’s $1tn economic agenda.

“In the same vein, Other financial institutions hold significant potential to drive productivity and economic growth by expanding access to credit and financial services for underserved individuals and businesses. To unlock this untapped potential, we aim to strengthen key institutions—particularly Primary Mortgage Banks and Microfinance Banks—to enhance their efficiency and impact.

“Our strategy includes implementing model mortgage foreclosure laws to stimulate lending and reduce delinquency, integrating PMBs and MFBs into the GSI platform to minimise non-performing loans, and leveraging Development Finance Institutions more effectively to provide increased lending facilities to well-managed OFIs,” he noted.

As part of the recapitalisation programme, the CBN introduced a unique definition of minimum capital base, limited to paid-up share capital and share premium, while deliberately excluding other reserves and retained earnings.

This narrow definition means that nearly all banks must raise fresh capital, even though many already possess shareholders’ funds exceeding the previous capital requirements.

The CBN governor reaffirmed the strength of the banking sector, noting that key indicators continue to reflect a resilient and stable financial system.

“The non-performing loan ratio remains within the prudential benchmark of five per cent, showcasing strong credit risk management. The banking sector liquidity ratio comfortably exceeds the regulatory floor of 30 per cent, a level, which ensures banks are maintaining adequate cash flow to meet the needs of customers and their operations. The recent stress test conducted also reaffirmed the continued strength of our banking system.

“I am pleased to note that a significant number of banks have raised the required capital through rights issues and public offerings well ahead of the 2026 deadline. I believe that the banking sector is in a strong position to support Nigeria’s economic recovery by enabling access to credit for MSMES and supporting investment in critical sectors of our economy,” he enunciated.

Also speaking, CBN Deputy Governor, Corporate Services, Ms Emem Usoro, emphasised that achieving a $1tn economy demands strategic planning, well-defined policies, consistent execution, and inclusive collaboration between the public and private sectors.

She identified the recapitalisation of banks as a critical pillar of this ambition, stressing that Nigerian banks must be adequately capitalised to support the financial needs of a larger and more dynamic economy.

“As we work towards building a $1tn economy, we must consider the recapitalisation of our banks to be able to fund, finance and power the economy, and to favourably compete globally,” Usoro said at a recent media engagement in Abuja.

She stressed the need for collective action from all stakeholders, stating that the financial system must be ready to contribute to development.

“We should particularly pay attention to bank recapitalisation to ensure that our banks are strong, resilient and stable enough to carry out financial intermediation, and the much-needed financing of development projects and programmes,” she added.

The Group Managing Director of United Bank for Africa, Oliver Alawuba, has hailed the ongoing recapitalisation policy of the CBN as timely and strategic in positioning the financial system to meet the demands of an expanding and globally competitive economy.

Alawuba stated that the initiative is designed to enhance the banking sector’s resilience, equipping it to withstand macroeconomic challenges such as inflation, currency fluctuations, and global geopolitical uncertainties. He added that the policy would also strengthen Nigerian banks’ capacity to finance long-term national development priorities, including large-scale infrastructure and industrial projects.

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He emphasised that the recapitalisation drive transcends regulatory requirements, describing it as a forward-thinking strategy to prepare Nigerian banks for the operational scale and sophistication required in a trillion-dollar economy. According to him, the move will bolster the sector’s ability to support core economic drivers—oil and gas, agriculture, and manufacturing—while also enabling it to harness opportunities in emerging industries such as fintech, green energy, and infrastructure development

“Nigerian banks need adequate capital buffers to meet the evolving demands of these sectors. Without this, the industry cannot effectively rise to the challenge,” he said.

Alawuba highlighted the stark disparity between Nigerian banks and their counterparts in more advanced economies, where bank assets typically range from 70 to 150 per cent of Gross Domestic Product. In contrast, Nigerian bank assets accounted for only 11.97 per cent of GDP in 2024—a gap he stressed must be closed for the country’s financial system to meet global standards.

He applauded the CBN’s recent directive raising minimum capital requirements, describing it as a timely response to the urgent need for stronger financial institutions. According to him, well-capitalised banks are essential to delivering on key national priorities, including infrastructure development, digital innovation, inclusive financial services, and economic diversification.

Alawuba concluded that a strong and well-capitalised banking sector is fundamental to Nigeria’s goal of building a $1tn economy, and the ongoing recapitalisation initiative is a proactive step in that direction.

The Director of the Banking Supervision Department at the Central Bank of Nigeria, Olubuka Akinwunmi, shared insights into the current state of the banking sector. He noted that banks have consistently stayed within the prudential thresholds set by the regulator, which include guidelines for capital adequacy ratios and non-performing loans.

“Currently, all our banks are still within the prudential thresholds that were set. And they are actively pursuing various recapitalisation efforts,” Akinwunmi said.

Akinwunmi stated that mergers and acquisitions may naturally occur as banks evaluate their positions and seek strategic alignments.

“Banks are currently focused on raising their own capital, but engagements are ongoing, and when the opportunities arise, they will be taken,” Akinwunmi added.

Starting in 2025, financial institutions will be required by the CBN to enhance their compliance and governance frameworks to effectively address evolving risks.

“We are enhancing regulatory effectiveness and accountability, as demonstrated by recent changes to our supervisory and enforcement approach. Recently, penalties totalling N15 billion were imposed on 29 banks for breaches, including AML/CFT violations.

“In addition to these penalties, the banks are required to address the root causes of the lapses, which is crucial for improving regulatory effectiveness. Historically, the industry has struggled with recurring issues, but we are confident that this approach will help change that narrative,” the apex bank noted in a circular.

As the March 2026 deadline draws closer, the successful recapitalisation of eight banks marks a significant milestone in Nigeria’s journey toward building a more resilient and globally competitive financial system. The initiative not only reinforces confidence in the banking sector but also positions it as a critical enabler of the government’s ambition to achieve a $1tn economy.

With continued regulatory oversight, strategic stakeholder collaboration, and unwavering commitment to reform, the recapitalisation drive is set to transform Nigeria’s financial landscape—boosting credit access, supporting innovation, and laying the groundwork for inclusive and sustainable economic growth.