In a bid to fortify the Nigerian financial sector, the Central Bank of Nigeria (CBN) announced new minimum capital requirements for banks, with commercial banks facing the highest threshold. Effective immediately, commercial banks with international authorization must maintain a minimum capital base of N500 Billion, while those with national authorization must have at least N200 Billion. Regional banks face a requirement of N50 Billion. Merchant banks are mandated to maintain a minimum capital of N50 Billion, while non-interest banks with national and regional authorizations must have N20 Billion and N10 Billion, respectively.
The directive, confirmed by Mrs. Hakama Sidi Ali, Acting Director of the Corporate Communications Department, underscores the CBN's commitment to bolstering the resilience and solvency of banks to support Nigeria's economic growth. This move follows Governor Olayemi Cardoso's revelation at the Annual Bankers’ Dinner in November 2023.
Banks have been given a 24-month window, from April 1, 2024, to March 31, 2026, to meet the new capital requirements. To comply, banks are encouraged to consider options such as private placements, rights issues, mergers, acquisitions, or license authorization adjustments. Importantly, the minimum capital shall comprise paid-up capital and share premium only, excluding Additional Tier 1 (AT1) Capital. Banks failing to meet the Capital Adequacy Ratio (CAR) requirement will be mandated to inject fresh capital.
The CBN's circular also outlines requirements for proposed banks, with a stipulation that all new applications for banking licenses post-April 1, 2024, must adhere to the new capital guidelines. However, pending applications with a deposit or Approval-in-Principle (AIP) will be processed, provided the difference between the deposited capital and the new requirement is met by March 31, 2026.
To ensure compliance, banks must submit implementation plans detailing their chosen strategies to meet the new capital requirement by April 30, 2024. The CBN pledges to monitor and enforce adherence to the specified timeline rigorously.
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