The Central Bank of Nigeria (CBN) has hiked the minimum capital requirement for commercial banks, indicating the apex bank’s push for greater financial robustness.
Under the new directive, banks with national licenses must now have a minimum capital base of N200 billion, up from N25 billion.
Regional license holders are required to maintain a capital base of N50 billion, previously N15 billion, while international license holders face an increased requirement of N500 billion, up from N100 billion.
Merchant banks must also adhere to a new minimum capital of N50 billion, and non-interest banks must maintain N20 billion and N10 billion for national and regional authorizations, respectively.
This development follows the recent Monetary Policy Committee meeting where CBN Governor Yemi Cardoso stressed the importance of banks bolstering their capital bases to fortify the financial system.
A circular issued by Haruna Mustafa, the CBN’s Director of the Financial Policy and Regulation Department, mandates banks to meet the new requirements within 24 months, starting from April 1, 2024, and ending on March 31, 2026.
The CBN recommends various strategies for banks to raise fresh equity capital, including private placements, rights issues, and subscription offers.
It further suggests options such as mergers, acquisitions, and license upgrades or downgrades.
Importantly, the new capital requirement excludes shareholders’ fund and additional Tier 1 (AT1) capital. Banks breaching the capital adequacy ratio (CAR) requirement will be obligated to inject fresh capital to rectify their position.
Proposed banks must meet the paid-up capital requirement, and the new minimum capital applies to all new banking license applications submitted after April 1.
Existing banks must submit an implementation plan by April 30, detailing their strategy for meeting the new capital requirement.
“The CBN will continue to process all pending applications for banking licences for which a capital deposit had been made and an Approval-in-Principle (AIP) had been granted.
“However, the promoters of such proposed banks will make up the difference between the capital deposited with the CBN and the new capital requirement not later than March 31, 2026,” the circular highlighted.
