With an increase in minimum capital requirements for banks set by the Central Bank of Nigeria (CBN), the likelihood of bank mergers looms on the horizon.
A circular signed by Haruna Mustafa, the Director of the Financial Policy and Regulation Department at CBN, revealed this update and was distributed to all commercial, merchant, and non-interest banks.
Commercial banks with international authorization now have a minimum capital base set at N500 billion, up from N50 billion in 2005, according to the directive from the CBN.
Similarly, the new minimum capital requirements established by the CBN are as follows: National Spread Banks (N200 billion), Regional Banks (N50 billion), Merchant Banks (N50 billion), National Non-Interest Banks (N20 billion), and Regional Non-Interest Banks (N10 billion).
All banks are mandated to meet these revised minimum capital requirements within a 24-month period, starting from April 1, 2024, and ending on March 31, 2026.
Given the current macroeconomic challenges and various external and internal disruptions, it has become crucial for banks to increase and sustain sufficient capital to bolster their resilience, solvency, and ability to promote the growth of the Nigerian economy.
In line with Section 9 of the Banks and Other Financial Institutions Act (BOFIA) 2020, the CBN, fulfilling its obligation to ensure a secure and stable banking system, announces an upward revision of the minimum capital requirements for commercial, merchant, and non-interest banks in Nigeria,” as stated in the circular.
Notably, back in 2005, the capital requirement for obtaining an international banking license was N50 billion, and the minimum capital requirement for national banks stood at N25 billion.