CBN raises banks’ capital base to N500bn

Olayemi Cardoso
Olayemi Cardoso

The Central Bank of Nigeria (CBN) on Thursday announced an increase in the capital base for commercial banks.

The apex bank’s acting spokesperson Hakama Ali said in a statement that commercial banks with international authorisation are now required to shore up their capital base to N500 billion.

Banks with national authorisation will need to meet a N200 billion threshold, while those with regional authorisation are expected to achieve a N50 billion capital floor.

Also, the CBN said merchant banks are now subject to a N50 billion minimum capital requirement while non-interest banks with national and regional authorisations will need to bolster their capital to N20 billion and N10 billion respectively.

The CBN also emphasised that all banks are required to meet the minimum capital requirement within 24 months commencing from April 1, 2024, and terminating on March 31, 2026

The new capital requirement will consist solely of paid-up capital and share premium. This means shareholders’ fund will not be considered.

To meet the requirements, the CBN urged banks to consider injecting fresh equity capital through private placements, rights issues, and/or offers for subscription; to pursue Mergers and Acquisitions (M&As); and/or to consider upgrading or downgrading their license authorisation.

“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 statement stated.

The new minimum capital requirement will apply to all new applications for banking licenses submitted after April 1, 2024.

The circular also mentioned that the CBN would continue to process all pending applications for banking licenses where a capital deposit has been made and/or an approval-in-principle (AIP) has been granted.

Nonetheless, it stipulated that the promoters of such proposed banks must cover the difference between the capital deposited with the CBN and the new capital requirement by no later than March 31, 2026.

The apex bank noted that all banks should submit an implementation plan, clearly indicating their chosen methods for meeting the new capital requirement and detailing the various activities and their timelines, by no later than April 30, 2024.