The Central Bank of Nigeria (CBN’s) decision to embark on the recapitalisation of banks was to align monetary, fiscal policies with the Federal Government’s vision of prosperity for the people, businesses, and economy. The exercise, which is far underway, is recording significant successes, with successful capital raising by many banks and a surge in credit expansion to the domestic economy. CBN Governor, Olayemi Cardoso, explained that with stronger capital bases, banks can provide more loans to businesses and support the government’s quest for a $1 trillion economy.
Building bigger and stronger banks comes with great benefits to the banks, their customers, and the wider economy. For a government that wants to grow its economy to the $1 trillion mark, the support of the financial services sector led by the Central Bank of Nigeria (CBN) Governor, Olayemi Cardoso, is crucial.
The CBN Governor had explained that bank recapitalisation ensures that lenders are well-capitalised, enabling them to take on greater risks, particularly in underserved markets. With stronger capital bases, banks can provide more loans and financial products to Micro Small and Medium Enterprises (MSMEs), rural communities, and other vulnerable segments that have previously struggled to access formal financial services.
The CBN had on March 28, 2024, announced a two-year bank recapitalisation exercise which commenced on April 1, 2024, and is expected to end on March 31, 2026. The recapitalisation plan requires a minimum capital of N500 billion, N200 billion, and N50 billion for Commercial Banks with International, National, and Regional licenses, respectively. Others included merchant banks N50 billion; non-interest banks with national licence N20 billion, and non-interest banks with regional license will now have N10 billion minimum capital. The 24-month timeline for compliance ends on March 31, 2026.
Cardoso said the recapitalisation policy not only strengthens financial stability but also serves as a catalyst for inclusive growth. “By enabling banks to extend more credit to MSMEs, we enhance job creation and productivity. Furthermore, with increased capital, banks can invest in technology and innovation, crucial for driving digital financial services such as mobile money and agent banking. These technologies are keys to breaking down geographic and economic barriers, bringing financial services to even the most remote areas,” he stated.
He said Nigeria has what it takes to deepen financial inclusion and support the growth of business and economy, stressing that the recapitalization exercise would also support the government’s efforts to achieve a $1 trillion economy. The CBN further underscored the importance of banking recapitalisation as a major catalyst for the achievement of the $1 trillion economy agenda of the government.
Banking sector remains robust
Cardoso explained that the banking sector remains robust, with key indicators reflecting a resilient system. “The non-performing loan ratio remains within the prudential benchmark of five percent, showcasing strong credit risk management. The banking sector liquidity ratio comfortably exceeds the regulatory floor of 30 percent, a level that ensures banks are maintaining adequate cash flow to meet the needs of customers and their operations. The recent stress test also reaffirmed the continued strength of our banking system.
“I am pleased to note that a significant number of banks have raised the required capital through rights issues and public offerings well ahead of the 2026 deadline. I believe that the banking sector is in a strong position to support Nigeria’s economic recovery by enabling access to credit for MSMEs and supporting investment in critical sectors of our economy,” he said.
Deputy Governor, Corporate Services, Central Bank of Nigeria (CBN), Ms. Emem Usoro, said the journey to a $1 trillion economy requires structured planning, clearly defined policies, unwavering implementation, and an inclusive approach that aligns public and private sector interests. In her Keynote address in Abuja at a seminar organised by the CBN for business editors and financial correspondents, Usoro said that one of the key components of the $1 trillion ambition is the recapitalisation of Nigerian banks.
She noted that banks must be sufficiently capitalised to meet the financial demands of a larger and more dynamic economy. “As we work towards building a $1 trillion economy, we must consider the recapitalisation of our banks to be able to fund, finance, and power the economy, and to favourably compete globally,” Usoro said.
She further called for a collective effort from all stakeholders, adding that the financial system must be prepared to play its role in powering development. “We should particularly pay significant attention to bank recapitalisation to ensure that our banks are strong, resilient and stable enough to carry out financial intermediation, and the much-needed financing of development projects and programmes,” Usoro said.
Supporting her position, Dr. Olubuka Akinwumi, Director of the Banking Supervision Department at the CBN, provided insights into the state of the banking sector. He disclosed that banks have so far remained within the prudential thresholds stipulated by the regulator, including benchmarks for the capital adequacy ratio and non-performing loans. “As we speak, all our banks are still within the prudential thresholds that were set. And they are actively pursuing various recapitalisation efforts,” Akinwunmi said.
On the possibility of mergers and acquisitions, Akinwumi said such developments may occur naturally as banks assess their positions and seek strategic alignments. “Banks are currently focused on raising their capital, but engagements are ongoing, and when the opportunities arise, they will be taken,” Akinwunmi added.
Regarding the licensing of new banks, he confirmed a recent uptick in applications and approvals, noting that the apex bank continues to monitor and support institutions that align with national development goals. He said priority sectors such as agriculture, infrastructure, and manufacturing are receiving attention from both the government and financial institutions, as they are key to achieving a trillion-dollar economy. “If you look at this year’s national budget, it reflects a clear emphasis on critical sectors like health, education, infrastructure, and agriculture. Banks are taking cues from these priorities, recognizing them as viable areas for business expansion,” Akinwumi said.
Responding to questions on how many internationally active banks had met the new N500 billion capital requirement, he noted that substantial progress has already been made. “We are halfway through the journey in terms of timeline, and capital already raised; we are also at least halfway through. That is a positive signal,” he said.
He added that starting the recapitalisation process early has helped insulate the financial system from emerging global and domestic shocks. “The emerging global economic shifts and pressures were not lost on the management of the CBN. We started early. If we had waited till now, the challenges would have been greater. But we acted in time,” he remarked.
Dr. Akinwumi expressed confidence that the recapitalisation requirements will be met, stressing that existing shareholders’ funds continue to serve as a buffer. However, the CBN deliberately opted for fresh capital inflows, particularly from foreign investors who have shown renewed confidence in Nigeria’s financial system. “International perception of Nigeria’s banking sector is improving. The reforms over the past year, especially around the foreign exchange regime and improved transparency regarding reserves, have boosted investor confidence,” he said. He cited recent disclosures on Nigeria’s net reserves and improvements in regulatory credibility as key factors that are reshaping the outlook for foreign direct investment in the banking sector
