How CBN is building bigger, resilient banks through recapitalisation

By Babajide Komolafe, Economy Editor

The Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, has continued to drive his vision of regulatory excellence aimed at strengthening Nigeria’s financial system. The ongoing bank recapitalisation exercise, with about 20 banks already meeting the new minimum capital requirements, underscores the apex bank’s resolve to entrench a stronger, safer and more resilient banking system aligned with global best practices.

Analysts say the recapitalisation programme, anchored on capital raising and stricter supervision, is critical to safeguarding Nigeria’s financial ecosystem and positioning the banking sector to support sustainable economic growth.

The CBN believes that the emergence of bigger and stronger banks is central to achieving the Federal Government’s vision of economic expansion and a $1 trillion economy. According to the apex bank, sustainable growth cannot be achieved without a resilient financial system capable of supporting businesses, infrastructure development and long-term investments.

Under Cardoso’s leadership, the CBN has prioritised regulatory compliance, risk management and transparency as core pillars for protecting the financial sector and enhancing its credibility both locally and internationally.

Recapitalisation milestones

Ahead of the March 31, 2026 deadline, Cardoso, in his last public update on the recapitalisation programme, confirmed that 16 banks had met the new capital requirements, while 27 others were actively raising funds.

Similarly, the Deputy Governor, Economic Policy, CBN, Dr. Muhammad Abdullahi, disclosed at a Nigeria Economic Summit Group (NESG) forum that no fewer than 20 banks had already met the new thresholds.

Nigeria currently has 44 deposit-taking banks operating across different licence categories. Industry checks indicate that at least seven banks are considering scaling down their licences from national to regional banking, reflecting the concentration of their operations and the expanding reach of digital banking platforms across the country.

One bank holding an international banking licence also indicated recently that it may scale down to a national licence ahead of the deadline, while pursuing further recapitalisation to strengthen its capital base and potentially regain international authorisation.

The CBN classifies banks into three categories — international, national and regional — based on capital strength. Under the recapitalisation guidelines, banks are required not only to raise new capital but also to subject the funds to a rigorous capital verification process before allotment clearance and final inclusion in their capital base.

The apex bank is the final signatory in a tripartite Capital Verification Committee comprising the CBN, the Securities and Exchange Commission (SEC) and the Nigeria Deposit Insurance Corporation (NDIC). The committee is tasked with scrutinising funds raised under the recapitalisation programme to ensure integrity and compliance.

N4.14tr new capital expected

With about N4.14 trillion in new capital expected to be raised and 20 banks already meeting minimum requirements, the recapitalisation exercise represents a significant milestone for the Nigerian economy.

The CBN formally announced the two-year recapitalisation programme on March 28, 2024, with implementation commencing on April 1, 2024. The framework stipulates minimum capital requirements of N500 billion for international banks, N200 billion for national banks and N50 billion for regional banks. The compliance window closes on March 31, 2026.

Cardoso has repeatedly assured stakeholders that the apex bank will enforce strong governance, transparency and accountability to protect funds raised through the exercise.

“Banks meeting or exceeding the new requirements is a clear testament to the depth, resilience and capacity of Nigeria’s banking sector,” Cardoso said.

To strengthen oversight, the CBN has established a dedicated Compliance Department with responsibility for financial crime supervision, market conduct, enterprise security, corporate governance and environmental, social and governance (ESG) issues.

According to the CBN Governor, the regulator is redesigning the credit-risk framework to ensure that funds raised through recapitalisation are prudently managed.

“As recapitalisation progresses, we are redesigning the credit-risk framework to enforce stronger governance, greater transparency and firmer accountability across the sector. We are determined to break the boom-and-bust cycle that has accompanied past recapitalisation efforts,” Cardoso stated.

In the past, analysts had warned that banks often emerged from recapitalisation flush with liquidity, raising the risk of misapplication through poorly structured or risky loans. The CBN says new controls are being put in place to avoid a repeat.

Already, the CBN Credit Risk Management System (CRMS) is web-enabled, allowing banks and stakeholders to submit statutory returns and conduct borrower status enquiries. The apex bank is also integrating the CRMS with internal banking systems to improve efficiency and monitoring.

In a report titled Nigeria’s macro headwinds trigger bank recapitalisation, global audit firm Deloitte estimated that total funds to be raised by March 31, 2026 would amount to N4.14 trillion. The firm noted that the upward review of minimum capital requirements is essential to strengthening the banking industry’s capital adequacy.

According to Deloitte, Nigerian banks’ capital buffers have been weakened by macroeconomic headwinds such as high inflation, rising interest rates, currency volatility and foreign exchange illiquidity.

“The upward revision will ensure that Nigerian banks have the capacity to take on bigger risks and remain resilient amid domestic and external shocks. It will also improve liquidity and enhance banks’ loss-absorbing capacity,” the report said.

Strengthening resilience

Cardoso maintained that Nigeria’s banking system remains fundamentally sound and resilient, serving as a cornerstone of financial stability.

“At the same time, we remain vigilant to emerging risks, including cyber threats, credit-concentration pressures and operational vulnerabilities. These are being addressed through strengthened risk-based supervision and our ongoing transition to Basel III, which will further bolster resilience, improve capital quality and strengthen liquidity monitoring,” he said.

With only months to the end of the recapitalisation window, Cardoso said the programme remains firmly on track.

“As we strengthen the capacity of our banks, stress testing this year confirms that Nigeria’s banking sector remains fundamentally robust. Key financial soundness indicators overwhelmingly satisfied prudential benchmarks during the year,” he added.

The apex bank is also reinforcing operational discipline across the system to ensure that financial services are delivered efficiently to Nigerians.

“Our starting point was a comprehensive, end-to-end review of the entire cash lifecycle — from production and transportation to distribution and access by consumers. This holistic assessment enabled us to address root causes rather than symptoms,” Cardoso explained.

He said the CBN recalibrated its cash-printing models, issued guidelines on optimal ATM-to-card ratios, strengthened approval requirements before ATM or branch closures, enforced sanctions on banks with non-dispensing ATMs, and intensified supervision of payment agents and POS operators nationwide.

Ethics, professionalism

Addressing bankers recently, Cardoso said the ethics and professionalism of bankers and treasurers remain under constant scrutiny. He disclosed that the CBN has introduced the FX Global Code for all authorised dealers and market participants to ensure compliance with regulations.

He urged the Chartered Institute of Bankers of Nigeria (CIBN) to take the lead in enforcing professional standards across the industry.

“At the Central Bank, we have intensified surveillance of market activities to ensure compliance and eliminate bad actors who attempt to undermine the system. Together, we must build a market based on strong governance and transparency. As regulators, we will maintain a zero-tolerance approach to compliance violations,” he said.

Banks back policy

The Group Managing Director of United Bank for Africa (UBA), Mr. Oliver Alawuba, described the recapitalisation policy as timely and essential in positioning Nigeria’s financial system for growth and global competitiveness.

He said the policy would strengthen banks’ capacity to withstand economic shocks such as inflation, currency volatility and geopolitical disruptions, while enabling them to finance large-scale infrastructure and industrial projects.

According to Alawuba, the initiative goes beyond regulatory compliance and represents a forward-looking strategy to equip Nigerian banks for a trillion-dollar economy.

“Nigerian banks need adequate capital buffers to meet the evolving demands of sectors such as oil and gas, agriculture, manufacturing, fintech, green energy and infrastructure. Without this, the industry cannot effectively rise to the challenge,” he said.

Sector remains robust

Cardoso reiterated that key indicators show the banking sector remains robust.

“The non-performing loan ratio remains within the prudential benchmark of five per cent, showcasing strong credit risk management. The liquidity ratio comfortably exceeds the regulatory floor of 30 per cent, ensuring banks can meet customer and operational needs. Recent stress tests also reaffirmed the continued strength of our banking system,” he said.

He expressed optimism that the sector is well positioned to support Nigeria’s economic recovery.

“I am pleased to note that a significant number of banks have raised the required capital through rights issues and public offerings well ahead of the 2026 deadline. The banking sector is in a strong position to support economic recovery by enabling access to credit for MSMEs and supporting investment in critical sectors,” Cardoso added.

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