CBN Concludes Banking Sector Recapitalisation Programme: N4.65 Trillion Raised to Strengthen Financial System Resilience

The Central Bank of Nigeria (CBN) has successfully concluded the highly anticipated banking sector recapitalisation programme, which began in March 2024. This transformative initiative, aimed at fortifying Nigeria’s financial system, has seen Nigerian banks raise a substantial N4.65 trillion in new capital over the last 24 months. The completion of this recapitalisation programme marks a significant milestone in the evolution of Nigeria’s banking sector, enhancing its capacity to support economic growth and mitigate potential risks.

The recapitalisation programme has been met with strong participation from both domestic and international investors. Local investors contributed 72.55% of the total capital raised, while 27.45% came from international markets. This robust participation underscores the sustained confidence in the Nigerian banking sector despite the challenging global economic environment. The capital raised will bolster the banks’ ability to weather economic uncertainties, thereby strengthening the resilience of Nigeria’s financial system.

Governor Olayemi Cardoso of the CBN expressed his satisfaction with the outcome, stating, “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.”

Capital Adequacy and Financial Stability

As part of the recapitalisation process, the CBN introduced revised minimum capital requirements, with 33 banks meeting these new thresholds. This includes both regional and national banks, which are now in compliance with the required capital adequacy ratios (CAR). The capital adequacy ratio is a critical measure of a bank’s financial strength and its ability to absorb losses while remaining operational. The CBN’s efforts have ensured that the banking sector maintains CAR levels above the international Basel III benchmarks, further reinforcing the sector’s stability.

The minimum CAR thresholds for the sector were set at 10% for regional and national banks and 15% for banks with international authorization. This strategic move was designed to enhance the financial sector’s ability to withstand external shocks, while also fostering growth within the economy. The increase in capital has had a direct impact on the banks’ balance sheets, improving asset quality and ensuring a more transparent financial system.

While the apex bank has not provided official list of compliant banks, provisional compliance list indicated that

Guaranty Trust Holding Company (GTCO),
FCMB Group,
Fidelity Bank,
Zenith Bank,
Access Holdings,
First HoldCo
United Bank for Africa (UBA) had surpassed the N500 billion minimum capital requirements for their international banking licences.

All the four banks which operate on the principles of Islamic finance, have met the N20 billion minimum capital requirements for the segment.

These included

Jaiz Bank Plc,
Lotus Bank,
Taj Bank and
Sterling HoldCo’s The Alternative Bank.

Regional banks, which are limited to operating with specified region of the country are required to have new minimum capital of N50 billion.

Parallex Bank,
Signature Bank,
Suntrust Bank,
Alpha Morgan Bank,
NOVA Bank
Tatum Bank.

Ongoing Regulatory and Judicial Oversight

While the recapitalisation programme has been largely successful, a few institutions remain under ongoing regulatory and judicial review. These cases are being handled through established supervisory and legal frameworks to ensure compliance and the overall integrity of the banking sector.

The CBN has emphasized that all banks are fully operational, and there will be no disruption to banking services for customers. The continued availability of banking services remains a priority, as the recapitalisation programme was designed not only to strengthen financial institutions but also to ensure seamless service delivery to Nigerians.

Looking Ahead: A Resilient Future

With the completion of the recapitalisation programme, the Nigerian banking sector is poised for greater stability and growth. The improved capital positions of the banks enhance their ability to support businesses and individuals, driving investments in key sectors of the economy. Additionally, the banking sector’s strengthened position makes it better equipped to manage potential economic downturns, ensuring the continued trust of both local and international investors.

The CBN’s successful execution of this recapitalisation programme is expected to serve as a model for future financial sector reforms, offering lessons in strategic planning, regulatory oversight, and investor engagement. As Nigeria moves towards an increasingly diversified economy, the role of a strong, resilient banking sector will remain central to sustaining long-term economic prosperity.

The N4.65 trillion raised during the recapitalisation process reflects not only the strength of Nigeria’s banking sector but also the country’s broader economic potential. As the banking sector continues to thrive, it will play an essential role in Nigeria’s efforts to achieve sustainable economic growth and development.