Nigeria: CBN Increases Minimum Capital Requirement for Commercial Banks to N500 Billion

The Central Bank of Nigeria (CBN) has announced a new minimum capital requirement for banks, raising the bar for commercial banks with international authorization to N500 billion. This move comes shortly after the CBN urged Nigerian banks to expedite the recapitalization of their capital base to fortify the financial system.

According to a statement released by the apex bank on Thursday, Acting Director of the Corporate Communications Department, Mrs. Sidi Ali, confirmed the revised minimum capital base. She stated that commercial banks with national authorization are now required to maintain a minimum capital base of N200 billion, while those with regional authorization must have a minimum of N50 billion.

Additionally, merchant banks will be required to maintain a minimum capital base of N50 billion, while non-interest banks with national and regional authorizations must have minimum capital bases of N20 billion and N10 billion, respectively.

The CBN has given banks a 24-month window, commencing from April 1, 2024, to meet the new capital requirements, with the deadline set for March 31, 2026. A circular issued by the Director of the Financial Policy and Regulation Department, Mr. Haruna Mustafa, emphasized this requirement to all commercial, merchant, and non-interest banks, as well as promoters of proposed banks.

The primary objective of the recapitalization initiative is to enhance the resilience, solvency, and capacity of banks to support the growth of the Nigerian economy, as highlighted by CBN Governor Olayemi Cardoso during the Annual Bankers’ Dinner in November 2023.

To facilitate compliance with the new capital requirements, the CBN has encouraged banks to explore various avenues, including injecting fresh equity capital through private placements, rights issues, and/or offers for subscription, as well as engaging in mergers and acquisitions. The circular emphasized that the minimum capital shall consist of paid-up capital and share premium only, excluding Additional Tier 1 Capital.

Banks are required to submit an implementation plan outlining their chosen options for meeting the new capital requirement by April 30, 2024. The CBN has reiterated its commitment to monitoring and ensuring compliance with the new requirements within the specified timeline.

Furthermore, the CBN clarified that the new minimum capital requirement will apply to all new applications for banking licenses submitted after April 1, 2024. However, pending applications for banking licenses will be processed, provided that the promoters make up the difference between the capital deposited with the CBN and the new capital requirement by March 31, 2026.