In a significant move, the Central Bank of Nigeria (CBN) has introduced new minimum capital requirements for banks, aiming to bolster their financial stability and enhance their capacity to support the Nigerian economy. Here are the key details:
New Capital Thresholds:
- Commercial Banks with International Authorisation: The minimum capital base for commercial banks with international authorisation has been raised to ₦500 billion. This substantial increase is designed to fortify these banks’ ability to operate on a global scale.
- Commercial Banks with National Authorisation: The new minimum capital base for commercial banks with national authorisation is now ₦200 billion. This represents a significant eightfold increase from the previous requirement of ₦25 billion.
- Banks with Regional Authorisation: Banks operating with regional authorisation must now maintain a minimum capital base of ₦50 billion, up from the previous ₦15 billion.
- Merchant Banks: The minimum capital requirement for merchant banks has been set at ₦50 billion.
- Non-Interest Banks:
- Those with national authorisations must meet a minimum capital requirement of ₦20 billion.
- Non-interest banks with regional authorisations are required to maintain a minimum capital base of ₦10 billion.
Implementation Timeline:
- All banks are mandated to meet the new minimum capital requirement within 24 months, starting from April 1, 2024, and concluding on March 31, 2026.
Strategies for Compliance:
The CBN encourages banks to explore various avenues to meet the capital thresholds:
- Equity Capital Injection: Banks can consider raising fresh equity capital through private placements, rights issues, and offers for subscription.
- Mergers and Acquisitions (M&As): Consolidation through strategic mergers or acquisitions is another viable option.
- License Authorisation Adjustments: Banks may choose to upgrade or downgrade their licence authorisations based on their business strategies.
The CBN’s proactive approach aims to enhance the resilience, solvency, and overall health of the banking sector, ensuring its continued role in supporting economic growth. As banks adapt to these new requirements, they must also maintain strict compliance with the minimum capital adequacy ratio (CAR) applicable to their licence authorisations. Failure to meet the CAR requirement may necessitate an additional capital infusion to rectify the situation.
