LAGOS, Nigeria (VOICE OF NAIJA) – As part of efforts to strengthen the financial system in Nigeria, the Central Bank of Nigeria (CBN) has raised new minimum capital requirements for banks in the country to N500 billion.
The Acting Director of the Corporate Communications Department, Hakama Ali, confirmed this development on Thursday in Abuja.
Ali said: “The minimum capital base for commercial banks with international authorization has been set at N500 billion, while those with national authorization must meet a minimum of N200 billion.
“Similarly, banks with regional authorization are now required to have a minimum capital base of N50 billion.”
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For merchant banks, the new minimum capital requirement is N50 billion, while non-interest banks with national and regional authorizations must maintain capital bases of N20 billion and N10 billion respectively.
A circular signed by the Director of the Financial Policy and Regulation Department, Haruna Mustafa, emphasised that all banks must meet the new minimum capital requirement within 24 months, starting from April 1, 2024, and ending on March 31, 2026.
“The initiative aims to bolster banks’ resilience, solvency, and ability to support Nigeria’s economic growth,” Ali added.
The initiative, initially announced by the CBN Governor, Olayemi Cardoso, during the Annual Bankers’ Dinner in November 2023, aims to bolster banks’ resilience, solvency, and ability to support Nigeria’s economic growth.
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To facilitate compliance, the CBN advised banks to consider options such as injecting fresh equity capital through private placements, rights issues, or offers for subscription, as well as mergers and acquisitions, and upgrading or downgrading of licence authorization.
The circular clarified that the minimum capital shall comprise paid-up capital and share premium only, and it emphasised that the new requirement shall not be based on the Shareholders’ Fund.
Furthermore, the CBN stated that Additional Tier 1 (AT1) Capital would not be eligible for meeting the new requirement. Banks that fail to comply with the Capital Adequacy Ratio (CAR) requirement will be required to inject fresh capital to rectify their position.
The CBN also outlined that the minimum capital requirement for proposed banks shall be paid-up capital, and it will apply to all new applications for banking licences submitted after April 1, 2024.
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The CBN has also mandated that all banks submit an implementation plan outlining their chosen options for meeting the new capital requirement and associated activities with timelines by April 30, 2024.
The CBN will monitor and ensure compliance with the new requirements within the specified timeline.