Aiming to meet the Central Bank of Nigeria’s new capital base threshold, approximately 26 banks will need to raise approximately N3.972tn within the next 24 months.
In response to the new guidelines on its recapitalisation policy announced by the apex bank on Thursday, commercial banks with international authorization are directed to boost their capital base to N500bn, while national banks are required to reach N200bn.
The acting Director of Corporate Communications at the CBN, Sidi Ali, highlighted that commercial banks with national licenses must adhere to a N200bn threshold, with regional authorized banks expected to achieve a N50bn capital base.
Likewise, non-interest banks with national and regional authorizations will need to elevate their capital base to N20bn and N10bn, respectively.
The CBN’s decision follows shortly after the Monetary Policy Committee hinted at adjusting the banks’ capital base requirements.
As per the CBN circular on recapitalization, only the share capital and premium capital of the shareholders’ fund on the balance sheet will be considered.
The circular clearly stipulates the timeline for banks to meet the new capital requirement, emphasizing compliance with the minimum capital adequacy ratio applicable to their license authorization.
Projections based on the latest financial statements indicate that strategies need to be devised by most, if not all, financial institutions to meet the new standards.
However, dissent among bankers has surfaced regarding the exclusion of retained earnings from the share capital calculation, with concerns over the decision’s validity.
According to insights from NewsNow, the 26 banks collectively require over N3.972tn, with tier 1 banks expected to raise the highest amount of N2.569tn.
Notably, Access Bank, Nigeria’s largest bank, disclosed plans to raise funds for expansion, targeting substantial growth over the next few years to enhance its status as a leading lender on the continent.
Access Bank revealed intentions to raise funds through various means, including a rights issue, to meet the new capital requirement set by the CBN.
Besides Access Bank, other banks such as Union Bank of Nigeria, Zenith Bank, United Bank for Africa, Guaranty Trust Holdings Company Plc, Fidelity Bank, FCMB Group, and FBN Holdings Plc will also need significant capital enhancements.