Finance experts agree the banking sector under the CBN Governor, Dr. Olayemi Cardoso is deeper and resilient now than ever before. This has been attributed to the recent concluded recapitalisation exercise.
The recapitalisation was chiefly to enhance the resilience, competitiveness, and lending capacity of Nigeria’s financial system, positioning it to support the Federal Government’s targeted $1 trillion economy by 2030.
The “Renewed Hope” strategy, driven by the current administration, focuses on structural reforms, foreign investment, and, in particular, leveraging a projected 86% investment from the private sector to drive industrialization and digital economic growth, of which the Nigerian banks and the CBN will be key drivers.
To effectively contribute to the realisation of this vision, the Nigerian financial system needed to be stable, resilient and robust to drive investments and economic growth.
Recall the Central Bank of Nigeria (CBN) issued the circular announcing the new banking sector recapitalisation guidelines on March 28, 2024. The new capital base for commercial banks with international authorization was fixed for N500 billion, national banks, N200 billion, and regional banks N50 billion.
The policy officially commenced on April 1, 2024, giving banks a 24-month window to comply, with a deadline that was set for March 31, 2026. The CBN had specified that the new capital requirements should be met using paid-up capital and share premium only, excluding retained earnings. Banks were required to submit an implementation plan for meeting the new requirements.
The Circular provided three options that banks may undertake to raise capital. They are as follows: (i) Injecting fresh equity capital through private placement, rights issue, and offer for subscription; (ii) Mergers and acquisitions; and (iii) Upgrade and downgrade of licence authorisation.
Before this recent CBN recapitalisation exercise, the minimum capital requirement for Nigerian banks was N50 billion for international authorization, N25 billion for national, and N10 billion for regional banks. These figures were set after the 2004 banking reforms which became obviously insufficient due to devaluation and inflation, hence the recent recapitalisation.
The CBN announced that after the deadline of 31st March, 2026 at least 33 banks have fully recapitalised. The 33 banks successfully raised capital through rights issues, public offers, and private placements during this period. Some others explored the merger window.
Recapitalisation strengthens resilience and supports long‑term growth and the governance and risk management standards are enhanced.
According to the data released by the CBN, over the 24-month period, Nigerian banks raised a total of N4.65 trillion in new capital, effectively strengthening the resilience of the financial system and enhancing its capacity to support the economic growth.
According to the CBN, the programme recorded strong participation from both domestic and international investors, with 72.55% of capital sourced locally and 27.45% from international markets, reflecting sustained confidence in the Nigerian banking sector, both locally and internationally.
It is worthy to note that the recapitalisation exercise is a deft banking reform since 2005, modernising regulatory and risk management frameworks.
The successful completion of the two-year exercise reflects strong coordination among the CBN, the Ministry of Finance, and the capital markets.
The benefits include structural and enduring which is a testament to the stability, global competitiveness, and sustained GDP growth of the Nigerian banking sector.
This also means that with stronger capital, better risk management, and tighter oversight, Nigerian banks are ready to support individuals, businesses, and our growing economy.
The Central Bank of Nigeria is gradually building a stable, transparent, and resilient financial system that works for you.
The CBN has assured that even the banks that are yet to fully recapitalise remain functional and have been allowed a window to recapitalise.
ADDITIONAL BENEFITS OF THE RECAPITALISATION EXERCISE
- Stronger, More Resilient Banks
- Larger capital bases allow banks to absorb shocks, align with Basel III standards, and maintain financial stability.
- Improved risk management and governance structures are being embedded sector-wide.
- Enhanced Capacity for Large-Scale Financing
- Increased capital enables banks to finance infrastructure, energy, manufacturing, and technology projects that require long-term, high-value funding.
- The recapitalised sector will better support the renewed industrialisation and export diversification agendas.
- Investor Confidence and Market Stability
- The participation of foreign investors demonstrates international confidence in Nigeria’s financial reforms.
- Stronger balance sheets will enhance credit ratings and reduce systemic risk.
- Synergy Between Fiscal and Monetary Policy
- The CBN’s recapitalisation aligns monetary policy with the Federal Government’s fiscal growth plans.
- A sound banking base bolsters policy transmission, liquidity management, and inflation control.
- Long-Term Economic Growth
- By building banks “fit for purpose” in a trillion-dollar economy, the sector can sustainably finance SMEs, export-oriented firms, and major infrastructure projects.
- The recapitalisation is expected to anchor financial inclusion and broaden access to credit nationwide.
CBN Governor Olayemi Cardoso commented: “The recapitalisation programme has strengthened the capital base of Nigerian banks, reinforcing the resilience of the financial system and ensuring it is well positioned to support economic growth and withstand domestic and external shocks.”
“Sustainable economic growth is unattainable without a resilient financial system. This recapitalisation ensures Nigerian banks can fund the scale of transactions needed to drive a $1 trillion economy” he further stated.
There is no doubt the recapitalisation has strengthened capital adequacy ratios (CAR), with the sector maintaining levels above International Basel benchmarks. Minimum CAR thresholds remain at 10% for regional and national banks and 15% for banks with international authorization. The recapitalisation, implemented alongside an orderly exit from regulatory forbearance, has improved asset quality, reinforcing balance sheet transparency and overall financial system stability.
Dr. David Akwu, a financial analyst, lauded the CBN’s successful recapitalization exercise and agreed Nigerian banks are now repositioned for better delivery.
He acknowledged that over 20 years since the last recapitalisation happened, the economy has grown bigger and the Nigerian banks also needed to increase capacity to adequately support the economy.
“Indeed, the previous capital base became inadequate over the years. I am happy the CBN was proactive to introduce the recapitalisation initiative. Indeed, some banks began to show significant stress signs. So, if the CBN had not forced them to shore up their capital base, some banks may have failed. The industry is grateful to the CBN Governor and his team for this timely intervention. The economy would be better for it.”
