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The Central Bank of Nigeria (CBN) has announced a significant increase in minimum capital requirements for banks, signaling potential mergers within the sector.
In a circular addressed to all commercial, merchant, and non-interest banks, the CBN outlined the new capital thresholds, emphasizing the need for banks to bolster their financial strength amidst prevailing macroeconomic challenges.
Effective April 1, 2024, banks with international authorization are mandated to maintain a minimum capital base of N500 billion, a substantial increase from the previous requirement of N50 billion set in 2005.
Additionally, the CBN has set varying minimum capital requirements for banks with national, regional, and merchant designations, as well as non-interest banks.
All banks are given a 24-month window, ending on March 31, 2026, to comply with the revised capital requirements.
The CBN justified the increase by citing the necessity for banks to enhance their resilience, solvency, and capacity to support the growth of the Nigerian economy amidst both external and domestic economic challenges.
The circular partly reads, “The prevailing macroeconomic challenges and headwinds occasioned by external and domestic shocks have underscored the need for banks to raise and maintain adequate capital to enhance their resilience, solvency and capacity to continue to support the growth of the Nigerian economy.
“Consequently, in furtherance of its statutory responsibility to promote a safe, sound and stable banking system and in line with Section 9 of the Banks and Other Financial Institutions Act (BOFIA) 2020, the Central Bank of Nigeria (CBN) at this moment announces an upward review of the minimum capital requirements for commercial, merchant and non-interest banks in Nigeria.”
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