Nigerian banks eye finishing line on recapitalisation

For Nigerian banks, March 26, 2026 looms large on the horizon. That is when they must show they’ve met the new capital requirements set by the Central Bank of Nigeria (CBN) for lenders operating in the country.

In March 2024, banks were given two years by the financial system regulator to meet the new targets. The banks with both local and international operations were required to have minimum capital of 500bn naira, while those that operated only nationally need to have 200bn naira. Minimum capital for regional and merchant banks was set at 50bn naira, with non-interest banks required to have 20bn naira, if functioning nationally, and 10bn naira if functioning regionally.

The exercise is the first time in two decades that Nigerian banks have been asked to raise fresh capital. The last time was in 2004, when the maximum amount of capital for banks was set at 25 billion naira.

That target it no longer deemed adequate given repeated currency devaluation and sustained inflation that has eroded the capital base of banks. President Bola Tinubu’s decision to end decades of fuel subsidies and float the naira exchange rate on taking office in 2023 have further accelerated the need for stricter targets.

Increasing the minimum capital of banks in a bid to instill resilience in the country’s financial system was among the responses of the Central Bank to the realities of Tinubu’s economic reforms. 

With six months left to go until the deadline, only eight of the country’s 26 banks have fully met the capital requirements. For the rest, it’s likely going to be a sprint to wire – with those unable to meet the requirements possibly being forced to merge, be acquired by a competitor or leave the business.

The Central Bank has demanded injections of new capital into the banking system, precluding any use of shareholders’ funds or additional tier-1 capital (hybrid debt instruments like preferred shares and contingent convertible securities) as substitutes. Lenders have responded with new share offers, rights issues to existing shareholders and private placements by heavyweight investors.

During July’s monetary policy committee briefing, Central Bank of Nigeria (CBN) governor Olayemi Cardoso said that eight banks had already met the requirements. 

“There has been a lot of interest locally in investing in the banks,” he said. “We will continue to do our part by building resilience, creating buffers and adhering to the rules.”

Banks scramble to raise funds

Among the first off the mark were Access Bank, Zenith Bank, Ecobank Nigeria and Jaiz Bank. Ecobank, the Nigerian subsidiary of Togo-based Ecobank Transnational, and Jaiz Bank, a non-interest bank, had already amassed the required funds.  

Among those raising new funds, Access Bank was the first to conclude a rights issue, leaving it with capital of 595bn naira by March. Zenith followed with a combined rights issue and share offer that brought its capital to 615bn naira.

Guaranty Trust Bank reached its own target through a two-phased approach that started with a rights issue in Nigeria that netted 351bn naira. Subsequently, the lender listed shares on the London Stock Exchange with proceeds of $105m to reach the required target.  

For other peers such as United Bank for Africa and First Bank, the country’s oldest bank, the process has moved less quickly.

UBA plans to conclude its capital-raising process by the end of the third quarter, according to chairman Tony Elumelu. With a capital base of 116bn naira at the time of the CBN directive, the bank raised 251bn naira from a rights issue that ended in December, and hopes to raise the rest in the coming months. Another sale of 3.15bn ordinary shares to existing shareholders ended on September 5.

First Bank’s recapitalisation efforts appear to have been delayed by a boardroom conflict in which Lagos billionaire Femi Otedola battled rivals for a takeover. Otedola had quietly acquired the parent company’s shares until he had enough to assert ownership, forcing out rivals Oba Otudeko and Tunde Hassan-Odukale. The end of the battle should clear the way for First Bank to pursue recapitalisation.

“Strong investor appetite has ensured that the vast majority of capital raisings so far have been successful,” Fitch Ratings said in a recent assessment of the recapitalisation programme. “Most first- and second-tier banks should be able to meet their new capital requirements through capital raisings alone. Therefore, we believe the likelihood of banking sector consolidation among first- and second-tier banks has decreased.”

Smaller banks pursue differing paths

Among the second-tier banks are Fidelity Bank and the First City Monument Bank (FCMB) group, both of which have international operations. Both have raised some initial capital and are now in the process of completing their recapitalisations. Fidelity raised 176bn naira in fresh capital in 2024 and is moving to get an additional 195bn naira via private placement before the end of the year. FCMB has announced plans to raise more capital through a new share sale in time to comply with the new requirements.

Wema Bank, in its pursuit of the requirements of a national bank, was among the first to raise funds through selling new shares to current investors. It has followed that up with a 50bn naira private placement to surpass the prescribed threshold of 200bn in naira. Wema expects to have a capital base of 276bn naira after  recapitalisation, about 34% more than the required limit.

Some other banks have opted for mergers. Union Bank – Nigeria’s second-oldest lender – and new generation bank Titan Trust Bank were the first to announce a successful merger with the approval of the Central Bank. It has been touted as a marriage of experience and cutting-edge technology. Unity Bank and the regional Providus Bank have notified the regulators of their plans to merge to meet the requirements for a national licence.

There is still not much clarity on the plans of two foreign-owned banks, Standard Chartered Bank and Citibank, to meet the capital requirements. Currently, Standard Chartered’s local bank has capital of 45.4bn naira while Citibank’s local bank has 14.4bn naira. To meet the requirements for a national banking licence, Standard Chartered needs an extra 154bn naira while Citibank needs 185bn naira. They have the option to raise the required funds, merge with others or even exit Nigeria completely. What options they choose will become clearer as the March 2026 deadline approaches.