Banks Struggle to Meet Capital Requirements as march 2026 deadline approaches
- With just six months remaining in the recapitalization window, over ten mid-tier and marginal banks are struggling to meet capital thresholds, potentially leading to mergers or acquisitions
- Rising competition for funding and a lack of investor confidence have complicated the situation, with the Central Bank of Nigeria offering vague assurances
- As the deadline approaches, many banks are rushing to finalize their fundraising and regulatory processes, while some have already met the target set for 2026
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Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.
With just six months left in the recapitalisation window, more than ten mid-tier and marginal banks are still facing numerous obstacles that could jeopardise their ability to meet the necessary capital thresholds and, in the worst-case scenario, force them to merge or acquire.
Source: Getty Images
According to information obtained by The Guardian over the weekend, the main issue is that investors are becoming weary of the game, which has made certain players much more likely to turn on investors who are scrounging for money.
Rising rivalry for funding, particularly as the insurance sector enters the mix, has now exacerbated the fear. The shifting tide is claimed to have given fund managers and investors more negotiating leverage, and they have started to reevaluate their original investing strategies.
A vague pledge that provides no real assurance to operators who "choose" to fall by the wayside is what the affected banks are relying on: the Central Bank of Nigeria's (CBN) vow to help participants get over the obstacle.
The vast differences in corporate governance and risk tolerances across the prospects may be the reason why discussions about mergers and acquisitions are erupting in the face of fear.
Panic over a potential last-minute forced merger that would wipe out company memories and result in a significant loss of equity is exacerbated by the delay in reaching an agreement on the conditions of the business combination.
In boardrooms, stakeholders are demanding full disclosures of present obligations that could endanger the new company' capacity to function after the consolidation.
Sources with knowledge of the talks say that ambiguous transparency rules and poor leadership at the negotiating tables have complicated the deal and slowed progress.
In the past, several operations were almost completely destroyed by legacy risks and obligations that were not disclosed before the merger was signed. For instance, the now-defunct FSB International Bank, which Fidelity Bank Plc acquired in the 2005 reorganisation, provided a $3 million legacy loan that has caused difficulties for the bank.
If the partners decide to join at the last minute, they might not have enough time to fully review unsettled commitments that could provide serious risks.
According to a source who spoke to The Guardian, players are working very hard to complete their fundraising processes before the first quarter (Q1) of next year.
At the latest Monetary Policy Committee (MPC) meeting, CBN Governor Yemi Cardoso announced that eight businesses had achieved the recapitalisation goal that the apex bank had set for the end of March 2026.
Source: Getty Images
According to reports, the regulator promised the operators that this objective would not be altered in any way. Last year, more than 30 commercial, non-interest, and merchant banks fought to fulfill the increased capital requirement; some of the leading banks declared they had already above the threshold at the start of the year.
Some are still in the heart of fundraising with their futures at stake, while roughly ten others—including Tier-one and foreign-owned brands—are completing the process and regulatory clearance, according to information obtained.
Recapitalisation drives merger fever
Legit.ng reported that the Central Bank of Nigeria's (CBN) 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.
Source: Legit.ng
