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CBN Mrs. Hakama Sidi Ali announced that the revised minimum capital base for commercial banks with national authorization has been increased to N200 billion, while those with regional authorization must now meet a new requirement of N50 billion.
Additionally, Mrs. Sidi Ali revealed that the minimum capital for merchant banks will be raised to N50 billion, and non-interest banks with national and regional authorizations are required to have a minimum capital of N20 billion and N10 billion, respectively.
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A circular signed by Mr. Haruna Mustafa, Director of the Financial Policy and Regulation Department, addressed to all commercial, merchant, and non-interest banks, as well as promoters of proposed banks, reiterated that banks must comply with the new minimum capital requirement within 24 months, starting from April 1, 2024, and ending on March 31, 2026.
The circular, initially announced by CBN Governor Olayemi Cardoso during the Annual Bankers’ Dinner in November 2023, aims to strengthen banks’ resilience, solvency, and ability to support Nigeria’s economic growth.
To help banks meet the new capital requirements, the CBN suggested options such as injecting fresh equity capital through private placements, rights issues, and/or offers for subscription; engaging in Mergers and Acquisitions (M&As); or upgrading or downgrading license authorizations.
Moreover, the circular outlined that the minimum capital should consist of paid-up capital and share premium only, with Additional Tier 1 (AT1) Capital not being eligible to meet the new requirement. Banks must also maintain compliance with the minimum capital adequacy ratio (CAR) requirement applicable to their license authorization.
For proposed banks, the minimum capital requirement shall be paid-up capital, and the new capital requirement will apply to all new banking license applications submitted after April 1, 2024.
Existing applications for banking licenses will continue to be processed by the CBN if a capital deposit has been made and/or an Approval-in-Principle (AIP) has been granted. However, promoters of such proposed banks must bridge the gap between the deposited capital and the new capital requirement by March 31, 2026.
Additionally, all banks are required to submit an implementation plan by April 30, 2024, outlining the chosen option(s) for meeting the new capital requirement and the associated activities with their timelines. The CBN will monitor and ensure compliance with the new requirements within the specified timeframe.
