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The recent announcement by the Central Bank of Nigeria (CBN) regarding new minimum capital requirements for banks aims to fortify the nation’s financial system.
As outlined in the statement signed by CBN spokesperson Mrs. Hakam Sidi Ali, commercial banks with international authorization are now required to maintain a minimum capital base of N500 billion.
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Similarly, the CBN has set the new minimum capital base for commercial banks with national authorization at N200 billion, while those with regional authorization must meet a requirement of N50 billion.
Additionally, the statement reveals that merchant banks are expected to have a minimum capital of N50 billion, while non-interest banks with national and regional authorizations must meet new requirements of N20 billion and N10 billion, respectively.
Here are 10 key points to understand about this development led by the regulatory bank:
1. International banks must maintain a capital base of N500 billion, while national banks are mandated to have a capital base of N200 billion, and regional banks are required to maintain a minimum capital base of N50 billion.
2. Merchant banks are obligated to maintain a capital base of N50 billion.
3. National non-interest banks are required to have a capital base of N20 billion, while regional non-interest banks must maintain a minimum capital base of N10 billion.
4. The new capital base requirement is independent of shareholders’ funds, and additional Tier 1 capital cannot be used to meet this requirement.
5. Banks are given until March 31, 2026, which is 24 months, to meet the new capital base benchmark.
6. Banks have several options for compliance, including raising new capital and engaging in mergers and reclassification, such as upgrading or downgrading their licenses.
7. no bank in the country currently meets the new capital base requirement set by the CBN.
8. Banks are required to submit their recapitalization plans by the end of April 30, 2024.
9. Presently, Zenith Bank has the highest paid-up capital and share premium, totaling N270.745 billion.
10. Banks that fail to meet the Capital Adequacy Requirement will be mandated to inject fresh capital.
