CBN Increases Capital Base for Zenith, Access, GTB, Others, Gives Banks 24 Months to Comply

CBN Increases Capital Base for Zenith, Access, GTB, Others, Gives Banks 24 Months to Comply

  • The Central Bank of Nigeria has directed banks operating in Nigeria to shore up their minimum capital to a new level
  • Commercial banks will achieve N500 billion, while banks with national and regional authorisation will meet N200 billion and N50 billion, respectively
  • The banks have two years to meet the new requirement starting on April 1, 2024, and ending on March 31, 2026

Legit.ng journalist Zainab Iwayemi has over three years of experience covering the Economy, Technology, and Capital Market.

The minimum capital required by banks operating in Nigeria has now been reviewed upward according to a directive by the apex bank.

CBN gives new order to banks
The bank allowed banks 24 months to comply with the new rule. Photo Credit: CBN, The Trusted Advisor
Source: UGC

The statement was signed by the director of the financial policy and regulation department, Haruna Mustafa.

The bank allowed 24 months (starting on April 1, 2024, and ending on March 31, 2026) to comply with the new rule in a statement to all commercial, merchant, and non-interest banks and promoters of planned banks.

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New capital requirement for Nigerian banks

Commercial banks with international licenses must now achieve the N500 billion minimum capital requirement based on the revised minimum capital base.

Similarly, the new criteria for individuals with regional authorisation is N50 billion, while the national authorisation is now N200 billion.

The Apex Bank also revealed that non-interest banks with national and regional authorisation need to have N20 billion and N10 billion in capital, respectively, while merchant banks would need to have N50 billion.

The CBN asked banks on Thursday to consider bringing in new equity capital through private placements, rights issues, and subscription offers; mergers and acquisitions; and/or upgrading or downgrading licensing authorisation to help them achieve the new minimum capital requirements.

Additionally, the apex bank stated that the new minimum capital would only include paid-up capital and share premium. It emphasised that the Shareholders' Fund would not be the foundation for the increased capital requirement.

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The CBN circular added that paid-up capital would be the minimum capital requirement for proposed banks, and all new applications for banking licenses submitted after April 1, 2024, would be subject to the new minimum capital requirement.

It noted that the CBN would continue to process all pending applications for banking licenses for which a capital deposit had been submitted or an approval-in-principle had been given.

However, the promoters of the proposed banks would have until March 31, 2026, to make up the gap between the capital deposited with the CBN and the increased capital requirement.

In 2005, when Charles Soludo, the current governor of Anambra State, was the top bank executive, the CBN last raised the capital basis for banks. The capital base increased to N25 billion from N2 billion.

An economist speaks

Weighing on the development, Fidelis Obaniyi said that purpose of review is to foster resilience and stability in the banking sector.

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He noted that the primary role of these commercial banks is intermediation between the surplus and deficit sides. But most of them focus on making money from FX arbitrage.

He added,

"I think commercial banks would now focus more on their primary purpose and pursue the goal of financial sector development."

CBN sells dollars to BDC operators at a 'cheap' rate

Meanwhile, Legit.ng reported that the Central Bank of Nigeria again made another bold move to achieve a stronger naira in the foreign exchange market.

In a circular released on March 25, 2024, the apex bank pegged a new round of $10,000 forex sales to licenced Bureau De Change (BDC) operators at N1,251/$1.

The naira at N1,251/$1 is cheaper when compared with the official exchange rate at the Nigerian Autonomous Foreign Exchange Market (NAFEM) window, which closed at N1408.04 on Monday, March 26.

Source: Legit.ng

Zainab Iwayemi avatar

Zainab Iwayemi (Business Editor) Zainab Iwayemi is a business journalist with over 5 years experience reporting activities in the stock market, tech, insurance, banking, and oil and gas sectors. She holds a Bachelor of Science (B.sc) degree in Sociology from the University of Ilorin, Kwara State. Before Legit.ng, she worked as a financial analyst at Nairametrics where she was rewarded for outstanding performance. She can be reached via zainab.iwayemi@corp.legit.ng

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