In furtherance of its sustained policy reforms in the nation’s financial system, the Central Bank of Nigeria (CBN) on Thursday announced new minimum capital requirements for Deposit Money Banks (DMBs) based on their size licence categories.
A statement issued by the Acting Director, Corporate Communications Department of the apex bank, Mrs Hakama Sidi-Ali, the latest revision of the minimum capitalization of the banks showed that a lender with national licence would have to increase its capital base from N25 billion to N200 billion.
The CBN also increased capital requirements for banks with regional licences from N15 billion to N50 billion and those with international licences from N100 billion to N500 billion while the new minimum capital for merchant banks will be N50 billion.
Sidi-Ali also announced that the new requirements for non-interest banks with national and regional authorisations are N20 billion and N10 billion.
A circular signed by the Director, Financial Policy and Regulation Department, Mr Haruna Mustafa, indicated that all banks were required to meet the new minimum capital requirement within two years, commencing from April 1 and terminating on March 31, 2026.
Mustafa, who urged banks to consider injecting fresh equity capital through private placements, rights issues and offers for subscription to meet the new minimum capital requirements, stated that the move was to enhance banks’ resilience, solvency, and capacity to continue supporting the growth of the Nigerian economy.
For lenders that may not be able to solely comply with the new minimum capital requirements, the Director suggested Mergers and Acquisitions (M&As); and upgrade or downgrade of licence authorisation.
According to him, the minimum capital shall comprise paid-up capital and share premium only.
He further clarified: “The new capital requirement shall not be based on the shareholders’ fund.
“Additional Tier 1 (AT1) Capital shall not be eligible for meeting the new requirement.
“Notwithstanding the capital increase, banks are to ensure strict compliance with the minimum capital adequacy ratio (CAR) requirement applicable to their licence authorisation.
“In line with extant regulations, banks that breach the CAR requirement shall be required to inject fresh capital to regularize their position.
“The CBN will continue to process all pending applications for banking licences for which a capital deposit had been made and an Approval-in-Principle (AIP) had been granted.
“However, the promoters of such proposed banks will make up the difference between the capital deposited with the CBN and the new capital requirement not later than March 31, 2026”, the Director stressed
While pointing out that all banks are required to submit an implementation plan, clearly indicating the chosen options for meeting the new capital requirement and various activities involved with their timelines, nor later than April 30, Mustafa maintained that the apex bank would monitor and ensure compliance with the new requirements within the specified time line.
The latest policy directive is coming barely 48 hours after the CBN’s Monetary Policy Committee (MPC) concluded its two-day meeting at which it raised the Monetary Policy Rate to an all-time high of 24.75%, amongst other rate adjustments.
The CBN Governor, Yemi Cardoso, had while briefing the media on the key decisions taken at the meeting advised the DMBs to focus on the recapitalisation of their capital base in order to strengthen the financial system.
