In a statement released on Tuesday, the apex bank said about 27% of the total, roughly N1.24 trillion, came from foreign investors, pointing to renewed international interest in Nigeria’s financial system.

CBN Governor Olayemi Cardoso disclosed the figures at the 4th Annual IMF/AFRITAC West 2 High-Level Executive Forum in Abuja.

The latest total represents an increase of N560 billion from the amount confirmed just a month ago, as banks step up efforts ahead of the March 31, 2026 deadline.

Strengthening Banks Against Economic Pressure

The recapitalisation programme, introduced in 2024, is aimed at positioning Nigerian banks to support a $1 trillion economy.

Cardoso said the sector has been stable despite recent policy changes, including fuel subsidy removal and exchange rate unification.

“Nigerian banks despite navigating subsidy removals and exchange rate reforms, attracted N4.61 trillion in new capital, nearly 27% from foreign investors, while even expanding their footprint across African markets,” he said.

The additional capital is expected to strengthen the industry in several ways. It should improve banks’ ability to absorb economic shocks, protect depositors’ funds, and support lending to key sectors such as infrastructure and industry.

It also puts Nigerian lenders in a stronger position to expand operations across Africa.

CBN Targets Loan Defaulters

Alongside the capital, the CBN is strengthening regulations around loan repayment and corporate governance.

Cardoso issued a warning to large borrowers who have failed to service their loans, saying the regulator has begun restricting access to banking services for such customers.

“We have implemented a restriction of banking services to non-performing large-ticket obligors. This decisive step underscores our commitment to credit discipline, financial integrity, and accountability,” he said.

The central bank also noted an end to regulatory leniency.

“Our stance on corporate governance is unequivocal: zero tolerance for violations. By ending years of regulatory forbearance, we have reinforced accountability, tightened supervision, and elevated compliance standards across the sector,” Cardoso added.

Under the new measures, strong oversight and compliance requirements have become mandatory for bank executives.

AI, Fintech and Stability

Discussions at the Abuja forum, which brought together regulators from six African countries, also focused on the future of banking.

Key areas included the growing role of financial technology, the use of artificial intelligence, and emerging risks such as climate change.

For businesses and individuals, a better-capitalised banking sector is expected to mean safer deposits and improved access to credit.

For the larger economy, the strong foreign participation in the N4.61 trillion capital raise shows confidence in current reforms and could support further investment inflows.

With the March 31 deadline approaching, Nigeria’s banking sector is projected to become more stable and competitive, both at home and across the African market.

This is the conclusion of a complex legal overhaul that attracted investigations from regulators and strong opposition from co-founder Elon Musk.

Under the new arrangement, the OpenAI Foundation assumes legal authority over OpenAI Group, a public benefit corporation with full freedom to raise funds, form partnerships, and acquire companies. 

The Foundation now holds a 26% ownership stake, alongside a warrant for additional shares as the company grows. Microsoft retains approximately 27%, valued around $135 billion, while employees and other investors share the remaining equity.

In a statement announcing the change, OpenAI Chairman Brett Taylor said:

“We believe that the world’s most powerful technology must be developed in a way that reflects the world’s collective interests. The close of our recapitalisation gives us the ability to keep pushing the frontier of AI, and an updated corporate structure to ensure progress serves everyone.”

The Foundation’s first initiative is a $25 billion commitment to two focus areas: advancing global health innovation and strengthening AI resilience. The health programme aims to fund research and open-source datasets to accelerate medical breakthroughs. 

Meanwhile, the AI resilience plan seeks to develop systems that protect critical sectors, such as energy, healthcare, and finance, from emerging risks tied to artificial intelligence.

The recapitalisation, completed after nearly a year of negotiations with regulators in California and Delaware, was influenced by legal reviews and recommendations from both states’ attorneys general. “We made several changes as a result of those discussions and we believe OpenAI, and as a result, the public we serve, are better for them,” Taylor added.

For Microsoft, this restructuring enhances its long-term collaboration with OpenAI. A company blog confirmed that the deal extends Microsoft’s intellectual property rights to OpenAI models until 2032. Should OpenAI declare that it has achieved artificial general intelligence (AGI), an independent expert panel will be tasked with verifying that achievement.

Before the overhaul, OpenAI operated as a capped-profit company within a non-profit framework, a model that became increasingly unsustainable as its goal expanded. 

Reports reveal that SoftBank’s $30 billion investment hinged on OpenAI’s conversion into a for-profit entity, a move that paved the way for the company’s current valuation surge.

OpenAI CEO Sam Altman has announced a public livestream alongside Chief Scientist Jakub Pachocki to discuss the implications of the restructure and answer questions. The event is scheduled to begin at 10:30 a.m. Pacific Time.

Through the OpenAI Foundation, the company has become one of the best-resourced philanthropic organisations globally, with its mission to ensure that AGI benefits all of humanity firmly at the centre of its operations. 

The for-profit and non-profit arms are expected to work in tandem, advancing commercial growth while driving ethical and societal impact on a global scale.

The CBN had mandated commercial banks in the country to shore up their capital base over the next two years.

Cardoso, in his remarks at the second International Financial Inclusion Conference 2024 in Lagos, noted that, almost one-third of Nigerians not being able to access capital to grow their businesses, secure savings for the future, or obtain insurance to mitigate risks remains a critical challenge for the country.

Stating that the CBN, alongside the bankers committee and other stakeholders in the financial industry remain committed to ensuring that the country achieves a 95 per cent financial inclusion, Cardoso said, the apex bank is keen on ensuring its Financial Inclusion policies and initiatives address the peculiar access to finance barriers for underserved populations, particularly Women, Youth, and MSMEs.

Cardoso, while emphasising that financial inclusion is foundational to Nigeria’s sustainable economic development, said, CBN had introduced new minimum capital requirements for banks as part of efforts to deepen financial inclusion.

“This strategic move ensures that banks are well-capitalised, enabling them to take on greater risks, particularly in underserved markets. With stronger capital bases, banks can provide more loans and financial products to MSMEs, rural communities, and other vulnerable segments that have previously struggled to access formal financial services,” he said.

He stated further that, aside from strengthening financial stability, the recapitalisation of the banking industry serves as a catalyst for inclusive growth.

“By enabling banks to extend more credit to MSMEs, we enhance job creation and productivity. Furthermore, with increased capital, banks can invest in technology and innovation, crucial for driving digital financial services such as mobile money and agent banking.

“These technologies are key to breaking down geographic and economic barriers, bringing financial services to even the most remote areas. Financial inclusion has the potential to unlock significant economic growth, particularly through the empowerment of small and medium-sized enterprises (SMEs), women and other vulnerable segments of the population.

“SMEs are responsible for over 80 per cent of employment in Nigeria, yet many struggle to access the credit needed for expansion. Financial inclusion for SMEs is essential to unlock the full potential of this sector, and the Nigerian government remains committed to supporting these enterprises.

“Similarly, women play a critical role in driving inclusive growth. Research shows that when women are financially empowered, they reinvest in their families and communities, creating broader socio-economic benefits. Yet, women in Nigeria are disproportionately excluded from the formal financial system.

“The Central Bank of Nigeria has made significant strides in promoting financial inclusion for Women and youth, particularly through Frameworks aimed at closing gender gaps and regulatory support for digital platforms that offer easier access to financial services for these vulnerable groups. With programs aimed at financial literacy, the CBN is also empowering young Nigerians to become financially independent, fostering entrepreneurship, and driving economic growth across the country” he said.

On his part, CBN’s deputy governor, Financial System Stability, Philip Ikeazor, whilst pointing out that financial exclusion rate in the country had dropped from 46.3 per cent in 2010 to 26 per cent as of 2023, noted that “despite this progress, there are over 28 million Nigerians who still have no access to formal financial products and services and certain challenges persist, particularly in ensuring financial access for five most excluded demographics: women, youth, rural communities, Northern Nigeria and Micro, Small and Medium Enterprises (MSMEs).”

The Chartered Institute, in its assessment of the policy, said, it noted with concern the impact of the recent Federal Government policy, imposing a 70% windfall tax on profits generated from foreign exchange transactions by banks from 2023 to 2025.

Bamidele Alimi, director general/CEO, Chartered Institute of Directors Nigeria (CIoD), in a statement available to Techeconomy, said while they recognise the urge to rejig the economy on record time and the importance of this tax policy in fostering economic stability, “we believe that the windfall tax is ill-timed, excessively high, and not fit for purpose given current economic realities”.

Alimi said the policy is against the overriding philosophy of Nigeria’s Tax Policy, which is grounded in the principles of equity, efficiency, and simplicity, aiming to create a fair and transparent system that supports economic growth and development.

“The Nigerian Tax Policy is geared towards creating an enabling environment for businesses to thrive, promoting investment, and fostering economic diversification.

“While this Bank Windfall Tax may have been implemented successfully in some advanced countries, it is not enough reason for a wholesome application in Nigeria at the moment, because it negates the overriding philosophy of Nigeria’s Tax Policy.

Having to remit windfall tax for the 2023 financial year when audited reports have been submitted and dividends allocated to shareholders is ill-timed. The financial year of banks ends in December 2023.

“Expectedly, banks are to submit their Audited Reports to the Central Bank of Nigeria (CBN) and other stakeholders by 31st of March 2024 and publish not later than 21 days after submission.

“This implies that all the banks must have done this to avoid sanctions and dividends allocated to shareholders.

“To have them remit the 2023 windfall tax on foreign exchange transactions, after all these activities, is nothing but retroactive.

“Also, banks are currently engaged in recapitalisation to meet the Central Bank of Nigeria’s (CBN) minimum capital requirements.

“The imposition of such a high tax could divert essential funds away from these efforts, hampering banks’ ability to strengthen their capital bases.

“This is particularly concerning given the strict definitions of paid-up share capital, which leaves banks with limited options for raising necessary funds”.

According to CIoD, a high windfall tax could lead to a decline in share prices, further complicating their financial stability.

“Another significant concern with the high windfall tax is its potential to reduce the lending capacity of banks.

“Financial institutions play an important role in providing loans to individuals and businesses, driving economic growth and development”.

The Chartered Institute of Directors Nigeria also argued that excessive tax burden on banks could lead to a reduction in available capital for lending, thereby slowing down economic activities.

“This could have a ripple effect on various sectors of the economy, ultimately stalling growth and development.

“High windfall tax has the potential to inhibit the financial inclusion drive. Banks, like any business, may pass on the additional costs incurred from the windfall tax to their customers.

“This could result in higher fees for banking services, such as loan processing, account maintenance, and transactions. Increased banking costs may disproportionately affect small and medium-sized enterprises (SMEs) and individual customers, potentially leading to financial exclusion for some segments of the population.

“Moreover, the introduction of a high windfall tax may negatively affect Nigeria’s appeal to foreign investors in the banking sector and make them competitively disadvantaged.

“This could lead to reduced Foreign Direct Investment, (FDI), limiting the sector’s growth potential and access to international expertise. Consequently, this may lead to an uneven playing field within the financial services industry.

“This could disadvantage banks compared to other financial institutions not subject to the tax, potentially leading to market distortions and unfair competition.

“Finally, the high windfall tax could also negatively impact shareholder returns. Shareholders expect dividends and returns on their investments, which are largely dependent on the profitability of banks.

“A significant portion of the profits being diverted to taxes could lead to reduced dividends and lower returns on investments. This might discourage investment in the banking sector, leading to reduced capital inflows”.

>>>Continue Reading…click: Windfall Tax: CIoD Enumerates 8 Cautious Steps to ‘Balanced Policy’

If you bought and held FCMB Group Plc stock in the past five years you would have outperformed all other major asset classes with the stock having a five-year return of over 350%. 

The Group has consistently delivered solid returns to investors like other peers, with the share price delivering an impressive return of 295.2% over the last five years, ranking 2nd across the industry.

Despite the run-up in the stock, FCMB is still cheap by many investment metrics. The shares currently trade at a price to book ratio of 0.31.

The price-to-book (P/B) ratio is an evaluation metric that is used to compare the current market price of a company’s stock to its book value.

The P/B ratio is favoured by value investors for its usefulness in identifying undervalued companies.  For value investors, a low P/B ratio (usually below 1) is the classic indication of an undervalued stock.

“The net impact of our model adjustments resulted in a revised 12-month Target Price of N11.49. The stock is currently trading at par with its 5-year mean Price to Book ratio of 0.3x. Our Target Price is also 70.2% higher than the last market close price. We, therefore, maintain our BUY recommendation on the stock,” Cardinal Stone Partners analysts said.

Also, Analysts at FBN Quest said,

“We have made material upward revisions to our ’24f-25f EPS forecasts for FCMB Plc following an impressive set of results in Q1’24 and an improved outlook for FY’24. Our price target of N14.8 implies a potential upside of +89.7%.”

Recapitalisation, earnings growth to lift stock price in 2024

FCMB Group’s recapitalization exercise of its banking subsidiary, First City Monument Bank Limited, is set to kickstart in the third quarter (Q3) of 2024.

Following CBN’s directive for banks to recapitalize before 2026, FCMB Group has detailed a comprehensive plan to raise the capital shortfall required to maintain its subsidiary’s international banking license.

According to the Group, the retention of its international license is paramount for its medium-term strategy as it anticipates continued growth and expansion of its international activities.

Under the detailed plan, the Group has highlighted three key phases: Phase I: Floating a capital raise of up to N150.0 billion via rights issue/public offer/private placement, Phase II: Executing other corporate actions to contribute over N110.0 billion and Phase III: Initiating private placements of between N110.0 billion – N140.0 billion.

For phase I, the FCMB Group has expressed that it would be entering the market in the third quarter *Q3) of 2024, with management expressing confidence in raising N100 billion (out of the phase I quota of N150.0 billion), given the express commitments made by its current largest shareholders to fully participate to the tune of their existing holding during the public offer exercise.

Phase II, which is expected to start in 2025, involves corporate actions involving its subsidiaries, particularly the relatively larger subsidiaries.

For full year (FY) 2024, aided by cross-selling opportunities across its businesses and the sustained adoption of its digital products which rose 62% year-on-year (YoY) for FY 2023, the Group expects digital revenue to increase by more than 35.0% for FY 2024.

Also, marketing synergies from its ecosystem strategy, and cost efficiency from digitalization, will drive its cost-to-income ratio (CIR) below 60.0%.

In full year 2024, FCMB has reaffirmed its strong commitment to building a supportive ecosystem driven by technology to transform its operations and enhance its competitive edge.

To this point, in FY 2023, the group deployed its proprietary core banking platform to three subsidiaries, with the main bank expected to commence migration in FY 2024.

Additionally, by employing process automation on loan origination, credit underwriting and disbursement, the bank has transformed its consumer finance business into a FinTech entity.

Elsewhere, the Group has seen progress on its technology platforms. The borderless banking platform, which is targeted towards diaspora flows, was commercialized in FY’23.

Secondly, its banking as a service platform recorded significant growth in FY’23, more than doubling its transaction volumes to 4.9 million.

These initiatives, coupled with significant investments in human capacity (over 50 in-house engineers) and the utilization of Artificial Intelligence are expected to support innovation and growth.

The Group has also doubled its dividend payout reflecting a strong growth trajectory as well as superior profitability and efficient capital utilisation.

FCMB Group Plc provides financial services including micro-lending, asset management, stock-broking, trusteeship and custodial services, foreign exchange, personal banking, corporate and commercial banking, investment banking and transaction banking products delivering cash, trade and liquidity management solutions to entities.

Lamido Yuguda, the Securities Exchange Commission (SEC), outgoing director-general disclosed this.

The commission equally actively supported the growth of the Fund Management industry in 2023 with approvals for new mutual funds (N18.20 billion) and discretionary/non-discretionary investment products (N17.60 billion).

Lamido Yuguda,  the outgoing director-general of SEC, stated this at a virtual press briefing on the 2024 first quarter Capital Market Committee (CMC) meeting held at the weekend.

He noted that, the SEC is partnering the Central Bank of Nigeria (CBN) and other relevant agencies to ensure a smooth recapitalisation process in the banking industry.

While commending CBN for the recently announced policy on bank recapitalisation, he noted that the commission has drawn useful lessons from the previous bank recapitalisation exercise and will very shortly issue appropriate guidelines to facilitate an efficient capital raising process in the present exercise.

The commission, he said, is committed to a process that will ensure speed, fairness, and good market conduct, adding that, SEC is collaborating with the CBN and other relevant agencies to ensure a smooth process.

He assured that the market will provide needed funds in recapitalisation, saying, the capital market is strong, efficient, resilient and over the past few quarters some large companies have raised significant financing from the market, signifying the depth and ability of the market to provide such financing.

We are confident of the ability of the market to provide the needed funds in the banking recapitalization, he said.

Yuguda, who is also the chairman of the committee, highlighted SEC’s commitment to embracing FinTech innovations while managing associated risks and establishing a regulatory framework for the digital asset space.

He explained that the Lagos Commodities and Futures Exchange, shed light on upcoming listings of gold, lithium, and oil and gas, adding that these products are aimed at expanding opportunities for traders and investors in the commodities space.

Yuguda said, the commission will continue to work with the exchange to overcome challenges on the path to building a strong commodities market in Nigeria.

He  pointed out that, this year, ongoing efforts such as inspection visits to various capital market operators are aimed at ensuring that the market remains fair and continues to be a veritable platform for financing and wealth creation, saying, SEC collaboration with international bodies like the Islamic Financial Services Board (IFSB) and Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) further reflect the SEC’s dedication to ensuring market resilience and global competitiveness.

This is has it expressed support for the decision of the Central Bank of Nigeria to increase the capital base of banks.

This was revealed in a statement signed by Dr. Muda Yusuf, the chief executive officer of CPPE, Monday.

Earlier, the CBN in a circular to commercial, merchant and non-interest banks and promoters of proposed banks announced the review of the capital requirements for the operations of the affected categories of banks in the country.

Citing domestic and global shocks, the apex bank, in a statement signed by Sidi Ali, its acting director of Corporate Communications, said it had become necessary to raise the capital base of the banks.

Thus, the CBN directed commercial banks with international authorisation to increase their capital base to N500bn and national banks to N200bn while those with regional authorisation were expected to achieve a N50bn capital floor.

Similarly, non-interest banks with national and regional authorisations will need to increase their capital to N20bn and N10bn, respectively.

According to the CPPE Boss, the inflation in the country had eroded the capital base of banks over the years, hence the need to recapitalise.

He said, “The last major review of the minimum capital requirement was done in 2005, some 18 years ago.  That was under President Olusegun Obasanjo, with Prof. Charles Soludo as CBN governor.  But since then, the value of the minimum capital has been significantly eroded by inflation.

“For instance, the official exchange rate in 2005 was about N130 to the dollar.  This meant that the N25bn for a national bank, for instance, was equivalent to $192m.  The naira equivalent today is about N250bn.  For the international banking license, it would be about $384m, an equivalent of about N500bn. The reality is that the capitalisation requirement has not increased materially in real terms, that is when adjusted for inflation.”

He said “the real issue is that inflation had weakened the value of money over time which makes recapitalisation imperative and inevitable.

The essence is to ensure the safety of depositors’ funds, strengthen the stability of the financial system, deepen resilience of the banking system and reposition the bank to support growth.”

Yusuf however, called for orderliness in the recapitalisation process to ensure minimal shocks and disruptions to the banking system and the economy at large.

His word,

“We commend the CBN for giving a timeline of 24 months for banks to comply.  This would minimise disruptions and dislocations in the financial system.  It would also ensure a smooth transition to the new capitalisation regime for banks.

“With the current approach and timeline given by the CBN, the risk of bank collapse or hasty mergers and acquisitions should be minimised. It is also laudable that the current categorisation of banks with differential capital requirements has been maintained – international, national and regional.  This is necessary to allow for inclusion and reduce the risk of dominance of the banking space by a few big banks,” he asserted.

Yusuf added that the apex bank must assure depositors of the safety of their funds in the banking system, irrespective of the current level of capitalisation of banks.

“It is important to sustain the confidence of the banking public about the soundness and stability of the Nigerian banking system, especially because of the perception and vulnerable risks of smaller banks.

“We implore the CBN to ensure minimum risk to shareholders and employees in the banking system, across the board.  It is also imperative to guide against elevated concentration risks and the deepening of oligopolistic structures in the banking system,” Yusuf cautioned.

This is as the race for the banking sector recapitalisation gathers momentum.

The source revealed that though some Nigerian banks were already in the Eurobond market, a number of them are also planning to go raise additional capital via Eurobonds.

“Some lenders are looking at private placements via foreign investors,” a top bank executive, who spoke on condition of anonymity, said because he was not authorised to speak on the matter.

According to records, some twelve banks will be unable to utilize about N4.8tn in retained earnings in their coffers to strengthen their capital base in line with the new Central Bank of Nigeria directive to raise capital.

Recall that the Central Bank of Nigeria (CBN) had in a new circular to commercial, merchant and non-interest banks and promoters of new banks on Thursday announced the review of the capital requirements for the operations of the affected categories of banks in the country.

Citing both domestic and global shocks, the apex bank in a statement signed by  Sidi Ali,  the acting director, Corporate Communications, said it had become necessary to raise the capital base of the banks.

Thus, the CBN directed commercial banks with international authoritative to increase their capital base to N500bn and national banks to N200bn, while those with regional authoritative are expected to achieve a N50bn capital floor.  Similarly, non-interest banks with national and regional authorisations will need to increase their capital to N20bn and N10bn, respectively.

The CBN’s move came two days after the Monetary Policy Committee hinted that it would change the capital base of the banks.

According to the CBN circular, only the share capital and share premium items on the Shareholder Fund portion of the balance sheet will be recognized in this particular round of re-capitalisation.

The apex bank circular said;

“For Existing Banks a, tThe minimum capital specified above shall comprise paid-up capital and share premium only. For the avoidance of doubt, the new capital requirement shall NOT be based on Shareholders’ Fund. b. Additional Tier 1 Capital shall not be eligible for the purpose of meeting the new requirement. c. All banks are required to meet the minimum capital requirement within a period of 24 months commencing from April 1, 2024 and terminating on March 31, 2026. d. Notwithstanding the capital increase, banks are to ensure strict compliance with the minimum capital adequacy ratio requirement applicable to their license authorization. e. In line with extant regulations, banks that breach the CAR requirement shall be required to inject fresh capital to regularize their position.”

For proposed banks, the CBN said that their minimum capital requirement shall be paid-up capital and applicable to all new applications for banking licenses submitted after April 1. 2024.

It added that for proposed banks whose applications it is processing, CBN, said “It shall continue to process all pending applications for banking licence for which capital deposit had been made and/or Approval-in-Principle had been granted. However, the promoters of such proposed banks shall make up the difference between the capital deposited with the CBN and the new capital requirement not later than March 31, 2026.”

Usually, the shareholders’ fund segment of the balance sheet consists of share capital, share premium, Additional Tier 1 capital, retained earnings, other components of equity.

Earlier, about 26 banks including commercial banks, merchant banks and non-interest banks would need to raise about N4tn in the next 24 months to meet the new capital base required by the CBN.

Findings revealed that 12 financial institutions, including Access Holdings, FBN Holdings, FCMB Group, Fidelity Bank Plc, Stanbic IBTC, Zenith Bank Plc, United Bank for Africa, Sterling Financial Holdings, Guaranty Trust Holding Company Plc, Wema Bank, Polaris Bank and non-interest bank, Jaiz Bank have N4.8tn in retained earnings, which they will be unable to touch due to the CBN directive.

Accordingly, retained earnings are the cumulative net profits of a company after accounting for dividend payments.

It captures the fact that because those earnings were not paid out to shareholders as dividends, they were instead retained by the company.

This is according to their financial reports filed with the Nigerian Exchange Limited.  The audited results of Access Holdings for 2023 showed that its retained earnings had risen to N715.13bn from N408.70bn in the previous year.

FBN Holdings’ retained earnings stood at N675.12bn from N397.71bn in 2022. FCMB Group saw its retained earnings grow by almost a 100 per cent to N148.99bn from N74.56bn. Fidelity Bank’s rose to N119.43bn from N44.88bn, Stanbic IBTC Bank’s reserves moved to N390.32bn from N290.30bn as of December 2023.

Zenith Bank saw its retained income appreciate by 40.06 per cent to N893.90bn at the end of September 2023 from N638.22bn in the corresponding period in 2022. UBA’s retained earnings rose by 74.79 per cent to N750.81bn from N429.53bn as of December 2022.

Meanwhile, Sterling Financial Holdings in its condensed unaudited interim financial statements for the year ended December 2023 revealed its retained earnings grew to N55.79bn from N44.92bn. GTCO’s Q3 2023 retained earnings rose by 97.56 per cent to N424.49bn from N214.85bn.

Wema  Bank in its consolidated and separate financial statements for the period ended December, 2023 saw its retained earnings rise to  N30.37bn from N11.45bn.

According to Polaris Bank 2022 financial results, its retained earnings declined to N7.23bn from N12.99bn. Similarly, Jaiz Bank recorded a 75.58 per cent decline to N557.90m from N2.28bn in its retained earnings.

Based on the CBN’s recognition of only  share capital and share premium, over 26 banks capital base stood at N2.31tn, which is far behind the N6.28tn required by the banks, in line with the apex bank new capital base.

To meet the requirement, the CBN gave the sector three options including issuance of new common shares (by way of public offer, rights issues, or private placements), Mergers and Acquisitions (M&As) and upgrade/downgrade of their respective license category or authorization.

The CBN said it would issue further guidelines to prescribe the definition, options and approaches to meeting the new minimum capital requirement.

However, in the wake of the CBN governor, Dr Olayemi Cardoso, announcing the planned re-capitalization, it was reliably gathered from top sources in the banking industry that the top executives were mulling various sources for raising the new capital.

According to officials, while some banks are eyeing merger and acquisition talks, a number of big lenders are eyeing some weaker ones for possible acquisition.

CBN unveiled disclosed this days after urging banks in the country to expedite action on the recapitalisation of their capital base in order to strengthen the financial system,

Confirming this in Abuja, on Thursday, March 28, 2024, Mrs. Hakama Sidi Ali, the acting director, Corporate Communications Department, said the new minimum capital base for commercial banks with national authorisation is now N200 Billion, while the new requirement for those with regional authorization is N50 Billion.

Mrs. Sidi Ali also disclosed that the new minimum capital for merchant banks would be N50 Billion, while the new requirements for non-interest banks with national and regional authorisations are N20 Billion and N10 Billion, respectively.

A circular signed by the Director, Financial Policy and Regulation Department, Mr. Haruna Mustafa, to all commercial, merchant, and non-interest banks and promoters of proposed banks emphasized 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

According to the circular, the move, initially disclosed by Olayemi Cardoso, the CBN governor, in his address to the Annual Bankers’ Dinner in November 2023, was to enhance banks’ resilience, solvency, and capacity to continue supporting the growth of the Nigerian economy.

To enable them to meet the minimum capital requirements, the CBN urged banks to consider inject fresh equity capital through private placements, rights issues and/or offers for subscription; Mergers and Acquisitions (M&As); and/or upgrade or downgrade of license authorisation.

Furthermore, the circular disclosed that the minimum capital shall comprise paid-up capital and share premium only. It stressed that the new capital requirement shall not be based on the Shareholders’ Fund.

“Additional Tier 1 (AT1) Capital shall not be eligible for meeting the new requirement. Notwithstanding the capital increase, banks are to ensure strict compliance with the minimum capital adequacy ratio (CAR) requirement applicable to their license authorisation.

“In line with extant regulations, banks that breach the CAR requirement shall be required to inject fresh capital to regularise their position,” it added.

The CBN circular said the minimum capital requirement for proposed banks shall be paid-up capital, adding that the new minimum capital requirement shall apply to all new applications for banking licenses submitted after April 1, 2024.

It noted that the CBN would continue to process all pending applications for banking licenses for which a capital deposit had been made and/or an Approval-in-Principle (AIP) had been granted. However, it said that the promoters of such proposed banks would make up the difference between the capital deposited with the CBN and the new capital requirement no later than March 31, 2026.

Meanwhile, the CBN said all banks are required to submit an implementation plan (clearly indicating the chosen option(s) for meeting the new capital requirement and various activities involved with their timelines) no later than April 30, 2024.

The CBN also disclosed that it would monitor and ensure compliance with the new requirements within the specified timeline.