LAGOS, Nigeria (VOICE OF NAIJA) – In a bid to strengthen the Nigerian banking sector, the Central Bank of Nigeria (CBN) introduced the banking sector consolidation and recapitalisation policy in 2004.
The policy, announced by the then CBN Governor, and current Governor of Anambra State, Prof. Charles Chukwuma Soludo, aimed to raise the minimum capital requirement for banks from two billion Naira to twenty five billion Naira by December 2005.
As a result of this policy, the number of commercial banks in Nigeria was reduced from 89 to 25, allowing for the inclusion of distressed banks and fostering a more robust and efficient banking industry.
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Fast forward to the present day, the current CBN Governor, Olayemi Cardoso, has raised the capital base requirement to 500 billion Naira.
Though CBN did not give reasons for the recapitalization policy it is widely believed that it may be aimed at mitigating the impact of external and domestic shocks at the backdrop of negative exchange rate movement and elevated inflation.
It is also believed that It is aimed at rescuing distressed banks and ensuring stronger banking operations.
Meanwhile, for proposed banks (new banking license applications after April 1, 2024) the apex bank said the paid-up capital should meet new standards.
The recapitalization exercise is expected to commence from April 1, 2024, through March 31, 2026.
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In light of these developments, it is expected that the total number of banks in the country will further reduce from the current 25.
Here is a look at some of the notable mergers that have taken place since the implementation of the recapitalisation policy.
1. Access Bank, Marina International Bank and Capital Bank International consolidated to form Access Bank Plc.
2. Afribank Plc and Afribank international (Merchant Bank) were unified to form Afribank Nigeria Plc.Skye Bank later acquired Afribank.
3. Plantinum Bank Limited and Habib Nig. Bank Limited Merged. Bank PHB Plc was coined from both institutions. The bank was later renamed to Keystone Bank.
4. Diamond Bank, Lion Bank, and Devcom Bank Limited were constituent members of the defunct Diamond Bank Plc.
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Diamomd Bank was later acquired by Access Bank Plc.
5. Fidelity Bank, FSB International Bank, and Manny Bank were merged together and named Fidelity Bank Plc.
6. First Bank Plc, MBC International Bank, and FSB (Merchant bank) amalgamated to form First Bank of Nigeria Plc.
7. Equational Trust Bank Limited and Devcom Bank Limited formed Equatoinal Trust Bank Plc.
After the CBN December 2005 deadline, it was treated as a distressed bank, and was later acquired by Sterling Bank.
8. Four banks consolidated into First City Monument Bank Plc (FCMB). These banks are First City Monument bank, Coop Dev. Bank, Nigeria-American Bank and Midas Bank.
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9. First Atlantic Bank, Inland Bank Nigeria Plc, IMB International Plc NUB International bank combined to form First Inland Bank Plc.
FCMB leveraged on First Inland Bank distressed policies and operations to acquire the bank.
10. IBTC Chartered bank Plc maintained the bank name after it merged with Regent Bank Plc.
11. Citizen International Bank, ACB international Bank Guidance Express Bank, Omega bank trans were integrated to form a new organisation known as Intercontinental Bank Plc.Intercontinental Bank was later acquired by Access Bank.
12. Oceanic Bank, International Bank Plc, and International Trust Bank formed a new organisation amidst the CBN recapitalization.
Despite that, Oceanic Bank was found unsound and inefficient after the merger and was later acquired by Ecobank Plc.
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13. Five financial institutions named Prudent Bank Plc, Bond Bank Limited, Reliance Bank Limited, Cooperative Bank Plc, and ETB International Bank Limited combined together to form Sky Bank Plc.
Skye Bank was acquired by Strategic Capital Investment Limited in October 2022 after shareholders failed to adequately recapitalise the bank after the 2016 CBN intervention.
14. The merging of six commercial banks: Citizen International Bank, Acb International Bank, Guardians Express Bank, Onga bank, Trans. International Bank and Fountain Trust Bank constitutes a new bank called Spring Bank Plc.
However, the bank was later acquired by Enterprise Bank after a review of unsound and inefficiencies in operations.
In October 2014, Enterprise Bank was acquired by Heritage Bank Limited.
15. Trust Bank Africa Limited, NBM Bank Limited, Magnum Trust Bank, NAL Bank Plc and Indo-Nigeria Bank are constituted members of Sterling Bank Plc.
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16. Old United Bank for Afirca, Standard Trust Bank Plc and Continental bank merged to form a Tier 1 financial institution known as United Bank for Africa Plc.
17. Union Merchant Bank Limited ,Broad Bank of Nigeria Limited and, Universal Trust bank Nigeria Plc all merged to form Union Bank of Nigeria Plc.
18. Nine banks consolidated to form a new bank known as Unity Bank Plc. It is known as the largest merger and consolidation in the history of Nigeria banking industry.
The financial institutions are: Intercity Bank Plc, First Interstate Bank Plc, Tropical Commercial Bank Plc, Pacific Bank Limited, Centre Point Bank Plc, Societe Bancaire Limited, NNB International Bank Plc, Bank of the North Limited and New Africa Bank Plc.
19. Wema Bank Plc, maintained its brand name after a merge with National Bank of Nigeria Limited.