3 Nigerian Banks Set to Merge as CBN Recapitalisation Deadline Nears
- Nigeria's banking sector braces for three major mergers ahead of the March 2026 recapitalisation deadline
- Tier-2 and smaller banks face pressure to solve capital challenges through strategic mergers
- Fintech disruption forces traditional banks to transform into lifestyle 'super-apps' in 2026
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.
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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.
Big banks clear the bar
By the end of 2025, most Tier-1 banks had already met the revised minimum capital threshold set by the CBN.
Several lenders have also announced fresh capital injections early in the New Year, further strengthening their balance sheets.
However, the picture is less comfortable for Tier-2 and smaller banks.
With limited access to capital markets and rising compliance costs, these institutions are facing increasing pressure to either raise fresh equity, attract strategic investors or merge with stronger peers.
DataPro’s Enterprise Risk Management analyst, Idris Shittu, said the recapitalisation drive has created a highly active mergers and acquisitions environment as weaker players race against time.
Three mergers likely before the March deadline
Shittu noted that three major bank mergers are expected before the end of the first quarter of 2026 as lenders scramble to beat the March deadline.
According to him, the rush to consolidate is already triggering intense “war room” discussions focused on deal execution, regulatory approvals and risk containment.
He warned, however, that while consolidation may strengthen capital buffers, it also introduces significant post-merger risks, particularly for smaller banks.
Integration risks loom large
Post-merger integration remains one of the biggest threats facing newly merged banks.
Shittu highlighted challenges such as IT system harmonisation, cultural alignment and the migration of non-performing loans as key pressure points.
These issues, he said, could strain management capacity and disrupt operations if not properly managed, especially in mergers involving institutions with different risk cultures and business models.
Triple threats facing banks in 2026
Beyond recapitalisation, Nigerian banks are contending with three major headwinds in 2026.
First is regulatory tightening, with the Cash Reserve Ratio (CRR) for commercial banks remaining at a steep 45%.
This effectively sterilises nearly half of banks’ naira deposits, severely restricting liquidity.
Second is capital pressure, as consolidation raises execution and integration risks at a time when balance sheets are already stretched.
Third is technological disruption, as fast-growing fintech firms continue to erode traditional banks’ dominance in retail and SME banking.
Fintech disruption pushes banks toward super-apps
Shittu said fintechs such as Moniepoint and Opay are rapidly capturing market share, particularly among small businesses and younger retail customers.
In response, he expects 2026 to mark a turning point where Nigerian banks evolve beyond conventional banking into lifestyle “super-apps” that bundle services like payments, travel bookings and everyday commerce.
However, legacy IT systems, slow procurement cycles and rigid structures could slow traditional banks, risking further customer migration unless they innovate faster through acquisitions or independent digital subsidiaries.
Fewer banks, stronger system ahead
Looking ahead, DataPro expects the number of banks in Nigeria to shrink by the end of 2026, resulting in a more concentrated but resilient industry capable of supporting larger transactions and Nigeria’s long-term $1 trillion economy ambition.
Still, Shittu cautioned that lessons from past consolidation exercises, particularly the 2005 reforms, underscore the dangers of poor integration planning and cultural clashes.
According to a financial analyst, Ishaya Ibrahim, Nigeria does not need many banks to hit the $1 trillion economy target, but targeted restructuring of its financial system.
"At one point in this country, Nigeria had 89 banks, which were mostly empty shells. Non-performing loans were at an all-time high. Depositors were losing their funds in almost every bank," he said.
"But after the first banking consolidation, Nigerian banks became stronger and more resilient. I believe this current move will boost the banking sector."
PwC sees brighter outlook for financial sector
In contrast, PwC struck a more optimistic tone in its Nigeria Economic Outlook – January 2026, identifying financial services as a major growth driver.
The firm said recapitalisation, fintech regulation reforms and secondary listings by Nigerian banks on global exchanges are boosting investor confidence.
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PwC added that rising demand for modern financial products, expanding credit and a projected capital market size of N262 trillion will deepen liquidity and sustain growth across banking, fintech and insurance in 2026.
Nigerian banks yet to meet new capital threshold
Legit.ng earlier reported that PricewaterhouseCoopers(PWC) Nigeria, an advisory and tax services company, projected that the naira would remain broadly stable against the US dollar in 2026, trading within the N1,440–1,500/$1 range.
The projection was included in the firm’s Economic Outlook 2026, which examines key trends likely to shape Nigeria’s economic landscape, including GDP growth, inflation, poverty, and monetary policy.
According to the report, the expected stability of the naira was underpinned by ongoing Central Bank of Nigeria (CBN) reforms and improved portfolio inflows, which have strengthened liquidity in the foreign exchange market.
Proofreading by Kola Muhammed, copy editor at Legit.ng.
Source: Legit.ng
