UPDATED: CBN directs Nigerian banks to increase capital base

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The Central Bank of Nigeria (CBN)on Thursday announced an increase in the capital base for different categories of banks in the country.

A statement by the CBN’s Acting Director of Corporate Communications, Hakama Ali, said the capital base of banks with international authorisation had been increased to N500 billion while that of national banks was increased to N200billion.

The CBN noted that commercial banks with regional authorisation are expected to achieve a N50 billion capital base. In contrast, merchant banks are expected toshore up their capital to N50 billion as the minimum capital requirement.

The apex bank directed non-interest banks with national and regional authorisations to boost their capital to N20 billion and N10 billion, respectively.

The CBN noted that all banks are required to meet the minimum capital requirement within 24 months, commencing from 1 April and terminating on 31 March 2026.

According to the banking industry regulator, the policy shift was made “in furtherance ofits statutory responsibility to promote a safe, sound and stable banking systemand in line with Section 9 of the Banks and Other Financial Institutions Act(BOFIA) 2020,” the statement said.

Olayemi Cardoso, the apex bank chief, is on a drive to help President Bola Tinubu attain his dream of a $1 trillion economy by 2030 and had enjoined banks as early as last November to brace up for a capital raise that will enable them boost capital adequacy and accelerate an economy that has seen sluggish growth since exiting a recession three years ago.

Thursday’s directive to banks leaves them with options including seeking new equity capital by way of private placements, rights issue and/or offer for subscription; mergers & acquisitions and/or upgrade or downgrade of license authorisation.

For existing banks, the minimum capital “shall comprise paid-up capital and share premium only. For the avoidance of doubt, the new capital requirement shall not be based on shareholders’ fund,” CBN said.

It further stated that additional Tier 1 capital – the type of capital that represents the main equity assets of a bank – does not qualify for the purpose of fulfilling the new requirement.

Lenders that flout the capital adequacy ratio requirement will have to infuse fresh capital to regularise their position, CBN said.

All fresh requests for banking permits submitted after 1 April have to conform to the new minimum capital requirement.

The apex bank directed all banks to hand in an implementation plan showing the selected option for meeting the new capital requirement to the Director of Banking Supervision Department of the bank by the end of next month.