CBN Gives Access, GTB, FBN, Others 24 Months To Meet New Capital Threshold

Days after urging Nigerian banks to expedite action on the recapitalisation of their capital base in order to strengthen the financial system, the Central Bank of Nigeria (CBN) on Thursday, March 28, 2024, unveiled new minimum capital requirements for banks, pegging the minimum capital base for commercial banks with international authorisation such as Access Bank, United Bank for Africa, Zenith Bank and others at N500bn.

A statement by the CBN in Abuja by Mrs. Hakama Sidi Ali, the Acting Director, Corporate Communications Department, quoted a circular by the Director, Financial Policy and Regulation Department, Haruna Mustafa to all commercial, merchant, and non-interest banks and promoters of proposed banks emphasizing that all banks are required to meet the minimum capital requirement in the 24 months beginning from April 1, 2024, and terminating on March 31, 2026.

Ahead of the deadline, banks are 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.

Shesaid the new minimum capital base for commercial banks with national authorisation is now N200bn, while the new requirement for those with regional authorization is N50bn.

The new minimum capital for merchant banks, she added, would be N50bn, while that of non-interest banks with national and regional authorisations are N20 Billion and N10 Billion, respectively.

According to the circular, the move, initially disclosed by the CBN Governor, Olayemi Cardoso, 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 injecting 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, rather than on shareholders’ Fund.

According to the circular, “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.