In a recent move, the Central Bank of Nigeria (CBN) has raised the minimum capital requirement for commercial banks holding international licenses to ₦500 billion. This step aims to strengthen the financial stability of the banking sector.
Capital Requirements for Different Bank Categories
Additionally, the CBN has adjusted capital requirements for banks operating with regional and national licenses. Banks with regional licenses now require ₦50 billion, up from ₦15 billion, while those with national licenses need ₦200 billion, up from ₦25 billion.
Merchant Banks and Non-Interest Banks Affected
Merchant banks are also affected by these changes, with the minimum capital set at ₦50 billion. For non-interest banks, the requirements stand at ₦20 billion for national authorization and ₦10 billion for regional authorization.
Deadline and Compliance
This decision comes after discussions in the Monetary Policy Committee (MPC) meeting. Banks are given 24 months, from April 1, to meet the new capital requirements, ending on March 31, 2026. The CBN emphasizes the importance of banks bolstering their resilience and solvency to continue supporting Nigeria’s economic growth.
Options for Meeting Requirements
To meet the new standards, banks are encouraged to explore various avenues. These include injecting fresh equity capital through private placements, rights issues, or offers for subscriptions. Mergers and acquisitions (M&As) and adjustments to license authorizations are also suggested.
Capital Structure and Compliance
The new capital requirement is based solely on paid-up capital and share premium, excluding Additional Tier 1 (AT1) Capital. Banks must also ensure compliance with the minimum capital adequacy ratio (CAR) applicable to their license. Failure to meet CAR requirements will necessitate injecting fresh capital to rectify the situation.
Implications for Proposed Banks
For proposed banks, the new minimum capital requirement applies. The CBN will process pending banking license applications, provided a capital deposit has been made and an Approval-in-Principle (AIP) granted. However, promoters must bridge the gap between the deposited capital and the new requirement by March 31, 2026.
Compliance Plan
All banks must submit an implementation plan outlining their chosen methods for meeting the new capital requirement by April 30. The CBN will monitor compliance closely to ensure adherence to the specified timeline.
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