The Central Bank of Nigeria, CBN, has raised the minimum capital base for commercial banks operating in Nigeria to N200bn from N25 billion and has given them two years to Recapitalise.
But the minimum capital base for commercial banks with international authorisation is now N500 billion. However, the tier-one banks with international licenses have already met this requirement and may not have to raise fresh capital.
The CBN in a circular dated 26th of March, 2024, signed by the Director, Financial Policy and Regulation Department, Haruna Mustafa, and all Commercial, Merchant, and Non-interest Banks; and Promoters of Proposed Banks in Nigeria also raised the minimum paid-up capital of other types of banks operating in Nigeria.
The circular titled Review of Minimum Capital Requirements for Commercial, Merchant, and Non-Interest Banks in Nigeria indicated that the new minimum capital base for commercial banks with national authorisation is now N200 billion, while the new requirement for those with regional authorisation is N50 billion. The new review also pegged minimum capital for merchant banks to N50 billion, while the new requirements for non-interest banks with national and regional authorisations are now N20 billion and N10 billion, respectively.
The CBN said the capital raise is expedient based on prevailing economic headwinds, nationally and internationally.
The apex bank further stated that the minimum capital requirement for proposed banks shall be paid-up capital, adding that the new minimum capital requirement shall apply to all new applications for banking licenses submitted after April 1, 2024 and for pending applicants, they are required to raise their minimum paid-up capital as per the new requirement on or before by March 31, 2026.
CBN said minimum capital will consist solely of paid-up capital and share premium. It emphasized that the new capital requirement would not be based on the Shareholders’ Fund.
“Additional Tier 1 (AT1) Capital will not be eligible for meeting the new requirement. Despite the increase in capital, banks must ensure strict compliance with the minimum Capital Adequacy Ratio (CAR) requirement applicable to their license authorisation,” the circular stated.
It added that banks falling short of the CAR requirement would be mandated to inject fresh capital to rectify their standing” it stated.
Meanwhile, the central bank has directed all banks to submit an implementation plan (clearly indicating the chosen option(s) for meeting the new capital requirement and various activities involved with their timelines) no later than April 30, 2024.
