The Central Bank of Nigeria (CBN) has announced new guidelines on its recapitalisation policy for banks in the country, News About Nigeria reports.
This comes barely 48 hours after stating the need for an increased capital base to enhance productivity.
In a statement released by the Acting Director of Corporate Communications, Sidi Ali, the CBN disclosed that commercial banks with international authorisation must raise their capital base to N500bn, while national banks are required to reach N200bn.
Furthermore, commercial banks with national licences must meet a threshold of N200bn, while those with regional authorisation are expected to achieve a capital floor of N50bn.
Similarly, non-interest banks with national and regional authorisations will need to increase their capital to N20bn and N10bn, respectively.
The move comes after the Monetary Policy Committee hinted at changing the capital base of the nation’s banks during its 294th meeting.
CBN Governor Olayemi Cardoso stressed the need for banks to speed up actions to strengthen the financial system against potential risks.
Banks are required to maintain minimum capital bases, and the capital basis is currently tiered dependent on the type of banking licence.
This proposed increase in the capital base comes nearly two decades after the 2004 banking reform, which raised the capital base from N2bn to N25bn.
Last year, Deposit Money Banks (DMBs) began preliminary merger and acquisition talks to raise fresh capital.
Ernst and Young’s report mentioned that 17 out of the existing 24 banks might be unable to meet the new capital requirement.
The CBN said that banks must meet the minimum capital requirement within 24 months commencing from April 1, 2024, and terminating on March 31, 2026.
Banks are urged to consider injecting fresh equity capital through private placements, rights issues, mergers and acquisitions, or upgrade/downgrade of licence authorisation.
Responding to the CBN’s directive, Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, welcomed the move, stating that the current capital base was grossly inadequate.
However, Prof. Uche Uwaleke of Nasarawa State University urged the CBN to incentivise banks rather than force them into increasing their capital base.
All banks are required to submit an implementation plan indicating the chosen option(s) for meeting the new capital requirement by April 30, 2024.
