CBN Recapitalisation: 7 Nigerian Banks Face Licence Downgrades as Deadline Nears
- Nigeria's banks face a recapitalisation deadline, reshaping strategies across the sector by March 31, 2026
- At least seven banks consider scaling down licences amidst pressures to meet new capital thresholds
- CBN emphasizes long-term stability as the recapitalisation drive aims to strengthen Nigeria's banking system
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Nigeria’s banking sector is entering a critical moment as the Central Bank of Nigeria (CBN) drives its sweeping recapitalisation programme toward a March 31, 2026, deadline.
Designed to create bigger, stronger and more resilient lenders, the reform is already reshaping strategies across the industry.
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While many banks are scrambling to raise fresh capital to retain their current licence categories, industry sources say at least seven lenders are considering scaling down their licences, signalling a strategic recalibration rather than outright distress.
Deadline pressure mounts
The recapitalisation exercise, unveiled in March 2024 and effective from April 1, set new minimum capital thresholds: N500 billion for international banks, N200 billion for national banks, and N50 billion for regional banks.
With less than three months left in the two-year compliance window, pressure is intensifying.
Nigeria currently has 44 deposit-taking banks operating under different licence categories. At least 20 banks have already met the new requirements, while others continue to raise funds through rights issues, public offers and private placements.
For some lenders, however, the cost of maintaining higher licence categories—especially international banking licences—has triggered a rethink.
Why some banks may scale down
Analysts say licence downgrades are emerging as a pragmatic option for banks whose operations are largely domestic or regionally concentrated.
Factors driving this shift include shareholder appetite, operational focus, and the near-level playing field created by Nigeria’s rapidly expanding digital banking ecosystem.
Sources indicate that one international bank is even considering a temporary step down to a national licence, with plans to raise additional capital later to reclaim its international status.
Under CBN rules, licence categories define operational scope: international banks can operate across borders, national banks nationwide, and regional banks within a limited number of states.
Bigger capital, stronger system
CBN Governor Olayemi Cardoso has repeatedly stressed that the recapitalisation programme is about long-term stability, not short-term compliance.
He says a resilient banking system is vital to Nigeria’s ambition of building a $1 trillion economy.
By the end of the exercise, the sector is expected to raise about N4.14 trillion in fresh capital. A Deloitte report described the move as necessary amid inflation, high interest rates, currency volatility and foreign exchange pressures, noting that stronger capital buffers will improve banks’ ability to absorb shocks.
Governance, risk and tighter oversight
Beyond capital raising, the CBN is tightening oversight on how new funds are sourced and deployed. Fresh equity must pass a rigorous verification process involving the CBN, the Securities and Exchange Commission, and the Nigeria Deposit Insurance Corporation.
To avoid past boom-and-bust cycles, the apex bank is redesigning its credit-risk framework, strengthening governance and enforcing greater transparency.
Its Credit Risk Management System has been fully digitised for real-time borrower checks and reporting.
"The current programme would Nigerian banks studier and globally competitive," financial expert, Osas Igho, told Legit.ng during a call.
He stressed that the banking recapitalisation programme will drive the proposed $1 trillion economy by President Bola Tinubu's government.
"A robust banking sector is critical to achieving any economic goal in any economy or country," he said.
Basel III and sector health
The recapitalisation drive is being reinforced by Nigeria’s transition to Basel III, aimed at improving capital quality, liquidity monitoring and resilience against risks such as cyber threats and credit concentration.
CBN stress tests show the sector remains fundamentally sound. Non-performing loans are within the five per cent ceiling, while liquidity ratios remain comfortably above regulatory minimums, according to a report by Daily Trust.
Industry leaders, including UBA Group Managing Director Oliver Alawuba, say the policy is timely and essential, positioning banks to finance large infrastructure, manufacturing, fintech and green energy projects.
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As the deadline approaches, Nigeria’s banking landscape is set to change. Some banks will emerge larger and stronger, while others will operate with leaner licences aligned to their strategic focus.
For the CBN, that outcome reflects discipline, not failure, and a banking system better prepared to support Nigeria’s long-term growth.
3 Nigerian banks set to merge
Legit.ng earlier reported that Nigeria’s banking sector is bracing for another wave of consolidation as at least three bank mergers are expected in early 2026, driven by mounting pressure to meet the Central Bank of Nigeria’s (CBN) new minimum capital requirements.
The anticipated mergers come as the March 31, 2026 recapitalisation deadline draws closer, forcing smaller lenders to pursue strategic combinations to survive intensifying regulatory and market scrutiny.
This projection was disclosed by credit rating agency DataPro in its 2026 Banking Sector Prospects in Nigeria, which outlines both opportunities and risks shaping the industry in the year ahead.
Source: Legit.ng
