Race Against Time: 6 Nigerian Banks in Final Push to Meet CBN’s N500bn Recapitalisation Target

• Six Nigerian banks are still actively engaged in capital-raising projects to meet the N500 billion recapitalisation target by the CBN
• GTBank, Ecobank, Fidelity Bank, Wema Bank, and First Bank are among the Nigerian lenders working to meet the deadline
• Reports say that two Nigerian banks, Access Bank and Zenith Bank, have so far exceeded the N500 billion target

Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.

About six lenders, including those with international licences, are still behind in meeting the N500 billion recapitalisation target set by the Central Bank of Nigeria (CBN), eight months before the deadline.

Some of these banks have concluded their capital raising programmes but have declared their intention to meet the target through private placement, rights issues,  and other fundraising projects.

CBN’s new minimum capital requirement

The Central Bank of Nigeria (CBN) has set a new minimum capital requirement for banks, with the deadline for compliance being March 31, 2026. 

This means the banks have a 24-month window from April 1, 2024, to meet the new thresholds.

The new requirements are:

• Commercial Banks with International License: N500 billion
• Commercial Banks with National License: N200 billion
• Commercial Banks with Regional License: N50 billion
• Merchant Banks: N50 billion
• Non-Interest Banks (National): N20 billion
• Non-Interest Banks (Regional): N10 billion

Crucially, the CBN specifies that this minimum capital must consist solely of paid-up capital and share premium, excluding retained earnings, other reserves, or Additional Tier 1 (AT1) Capital.

Analysis of Banks and their Capital Needs

While some banks have made significant progress or have already met the target, a number of them still need to raise substantial capital. 

Experts have noted that the situation is dynamic, with banks actively engaged in capital-raising activities.

Two banks meet the N500bn target

Zenith Bank Plc: Reported to have comfortably surpassed the N500 billion mark, reaching N614.65 billion.

Access Bank Plc: Also reported to have met the requirement, pushing its capital to N594.90 billion.

Banks still making significant progress

Fidelity Bank Plc: Has raised N127 billion and received regulatory approval for a N231.97 billion private placement, aiming to hit N500 billion. Its current capital is around N305.56 billion.

FBN Holdings (FirstBank's parent company): Has raised N187.6 billion and is preparing a N350 billion private placement. With current capital at N251.34 billion, a successful placement would bring it to N601.82 billion.

FCMB Group: Addressing a capital shortfall, has raised N147.5 billion through private placement and completed an N110.90 billion rights issue, bringing its capital to N266.23 billion.

Wema Bank (National License): Recently closed a N150 billion rights issue and has approval for an additional N50 billion private placement, potentially reaching N267 billion, which would put it comfortably above the N200 billion for a national license.

United Bank for Africa Plc (UBA): The chairman has assured stakeholders that they will meet the N500 billion requirement by Q3 2025. They conducted a rights issue of N251.0 billion in late 2024.

Ecobank Transnational Incorporated (ETI): Reported to be trailing behind with N353.51 billion.

Guaranty Trust Holding Company (GTCO): Reported to be trailing behind with N345.30 billion. 

According to reports, GTCO was reported to have concluded a N400.5 billion public offer in late 2024. This suggests their initial capital base was lower, and they are now well on their way to the target.

Banks still need significant capital

“Based on available information, and the dynamic nature of capital raising, it's challenging to provide a definitive, real-time list of banks with the largest shortfalls without access to their latest financial statements and ongoing capital raising updates,” Osas Igho, a financial analyst, said. 

“However, generally, those that are still actively pursuing rights issues, private placements, or have publicly stated their intent to raise substantial funds would fall into this category," Igho added.

Findings show that Ecobank Transnational Incorporated (ETI) and Guaranty Trust Holding Company (GTCO), despite their size and efforts, still have a gap of close to N500 billion for international licenses. 

Similarly, Fidelity Bank and FCMB are actively raising funds and still have some way to go to reach the N500 billion mark if they intend to maintain an international license, or N200 billion if they target a national license. Wema Bank is also still in the process of raising funds.

CBN's window for capital-raising

CBN directives allow banks to inject fresh equity capital through private placements, rights issues, and/or offers for subscription. 

Also, the apex bank allows them to pursue Mergers and Acquisitions (M&As), as smaller banks unable to meet the target might merge with stronger ones or be acquired.

The order gives the banks approval to upgrade or downgrade their license authorisation.

Experts have listed the consequences of failing to meet the required capital, stating that many banks may face licence downgrades, be merged or acquired, and lose their licences, which may lead to job losses and more.

According to them, investors may lose appetite for banking stocks, making it challenging for affected banks to attract further investments.

Two smaller banks reportedly begin merger talks

Legit.ng earlier reported that the CBN's recapitalisation target is set to significantly reshape the country's banking landscape, particularly impacting smaller banks.

The deadline for meeting the new capital requirements is March 31, 2026.

According to reports, two Nigerian banks, one with a regional licence and another with a national licence, have started merger talks, which may be finalised in the coming months.

Proofreading by Kola Muhammed, copy editor at Legit.ng.

Source: Legit.ng