The Central Bank of Nigeria’s (CBN) recent announcement of new minimum capital requirements for banks has placed the top five banks in a challenging position, with a collective deficit of N1.5 trillion to meet the new standards.
According to the CBN, commercial banks with international authorization are now required to have a minimum capital base of N500 billion, representing a significant increase from the previous N50 billion.
Similarly, banks with national authorization must maintain a minimum capital base of N200 billion, while those with regional authorization require N50 billion.
Acting Director of the CBN’s Corporate Communications Department, Mrs. Hakama Sidi Ali, confirmed these changes, emphasizing the need for banks to comply within a 24-month period.
To address the shortfall, banks are encouraged to explore options such as private placements, rights issues, mergers, and acquisitions. However, the CBN clarifies that the new capital requirement will only consider paid-up capital and share premium, excluding Additional Tier 1 (AT1) Capital.
Despite the stringent requirements, the CBN assures that it will monitor compliance closely and process pending applications for banking licenses.
However, existing banks must submit implementation plans by April 30, 2024, to demonstrate their strategy for meeting the new capital standards.
Analyzing the financial data of the top five banks—Access Bank, FirstBank, GTBank, UBA, and Zenith Bank—it’s evident that they collectively fall short of the required capital by N1.5 trillion.
