Nigeria’s banking sector is entering a decisive phase as the Central Bank of Nigeria (CBN) pushes ahead with its comprehensive recapitalisation programme, a reform designed to produce bigger, stronger and more resilient banks.
While many lenders are racing to raise fresh capital to retain their current licence status, our correspondent learnt that no fewer than seven banks are considering scaling down their licences, signalling a strategic reshaping of the industry ahead of the March 31, 2026 deadline.
The recapitalisation exercise, announced by the CBN in March 2024 and implemented from April 1 of that year, requires commercial banks to meet new minimum capital thresholds of N500 billion for international banks, N200 billion for national banks and N50 billion for regional banks.
The two-year compliance window ends in less than three months, intensifying pressure across the sector.
New choices emerge
Nigeria currently has 44 deposit-taking banks operating under different licence categories. While at least 20 banks have already met the new capital requirements, others are still raising funds through rights issues, public offers and private placements.
For some lenders, however, the cost of meeting higher capital thresholds—especially for international banking licences—has prompted a reassessment of business models.
Analysts say scaling down from international to national, or from national to regional licences, is emerging as a pragmatic option for banks whose operations are largely domestic or geographically concentrated.
At least seven banks are understood to be weighing licence downgrades, citing factors such as operational focus, shareholder appetite, and the near-equal competitive advantage now offered by Nigeria’s fast-expanding digital banking ecosystem.
It was learnt that one bank currently holding an international licence has also indicated that it may temporarily revert to a national licence, while pursuing additional capital raising to regain international status at a later date.
Under CBN regulations, licence categories are tied directly to capital strength and operational scope, with international banks allowed cross-border operations, national banks operating across Nigeria, and regional banks limited to a defined number of states.
Bigger capital, stronger banks
CBN Governor Olayemi Cardoso had consistently framed the recapitalisation programme as a long-term stability measure rather than a short-term regulatory hurdle.
According to him, a resilient financial system is critical to Nigeria’s economic transformation and its ambition to build a $1 trillion economy.
“Banks meeting or exceeding the new capital requirements is a clear testament to the depth, resilience and capacity of Nigeria’s banking sector,” Cardoso said recently, adding that several lenders are advancing steadily and are well positioned to meet the 2026 deadline.
About N4.14 trillion in new capital will be raised across the sector by the end of the exercise.
A Deloitte report titled Nigeria’s Macro Headwinds Trigger Bank Recapitalisation described the capital increase as essential, given the pressures of inflation, high 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 afloat amid domestic and external shocks,” the report noted, adding that stronger capital buffers would enhance banks’ loss-absorbing capacity.
Beyond raising funds, the CBN has placed strong emphasis on how new capital is managed. Banks are required to subject fresh equity to a rigorous capital-verification process before funds are fully recognised.
The apex bank is the final signatory in a tripartite capital-verification committee, alongside the Securities and Exchange Commission (SEC) and the Nigeria Deposit Insurance Corporation (NDIC). The committee scrutinises the source, integrity and deployment of funds raised under the recapitalisation programme.
Cardoso has warned that past recapitalisation efforts were sometimes followed by excessive risk-taking and poorly managed credit expansion. To prevent a repeat, the CBN is redesigning its credit-risk framework, enforcing stronger governance, transparency and accountability.
“We are determined to break the boom-and-bust cycle that has accompanied past recapitalisation exercises,” the governor said.
As part of this effort, the CBN Credit Risk Management System (CRMS) has been fully web-enabled, allowing real-time borrower checks and statutory reporting. The apex bank is also integrating the CRMS with banks’ internal systems to enhance credit discipline across the industry.
Compliance, governance and Basel III
The recapitalisation drive is being complemented by a broader regulatory push. The CBN has established a dedicated Compliance Department, with oversight covering financial crime supervision, market conduct, enterprise security, corporate governance and Environmental, Social and Governance (ESG) standards.
At the same time, Nigeria’s banking sector is transitioning to Basel III, a move expected to strengthen capital quality, improve liquidity monitoring and enhance resilience against shocks such as cyber threats, credit concentration risks and operational vulnerabilities.
Stress tests conducted by the CBN have so far confirmed that the banking system remains fundamentally sound, with key financial soundness indicators comfortably within prudential benchmarks.
Despite the pressures of recapitalisation and licence decisions, the CBN insists that the banking sector remains strong. The non-performing loan (NPL) ratio is within the regulatory ceiling of five per cent, while the liquidity ratio exceeds the 30 per cent minimum requirement.
“These indicators show that banks are maintaining adequate buffers to meet customer needs and operational obligations,” Cardoso said, noting that the sector is well positioned to support economic recovery.
“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,” Cardoso added.
He said the apex bank is reinforcing operational discipline to ensure the financial system serves all Nigerians reliably.
“Our starting point was a comprehensive, end‑to‑end review of the entire cash lifecycle: from production, to transportation, to distribution, and eventual access by consumers. This holistic assessment enabled us to address root causes rather than symptoms”.
Industry leaders share this optimism. United Bank for Africa (UBA) Group Managing Director, Oliver Alawuba, described the recapitalisation policy as timely and essential, arguing that it would enable banks to finance large-scale infrastructure, industrial projects and emerging sectors such as fintech, green energy and manufacturing.
“This initiative goes beyond regulatory compliance. It is about equipping Nigerian banks to operate at the scale and sophistication required by a trillion-dollar economy,” Alawuba who is Chairman of the Bankers’ Committee said.
As the March 2026 deadline approaches, there are expectations that Nigeria’s banking landscape to look markedly different.
While some lenders will emerge bigger and better capitalised, others will operate under leaner licence structures aligned with their strategic focus.
For the CBN, licence downgrades are not a failure of policy but evidence of market discipline at work. By forcing banks to match ambition with capital strength, the regulator believes the system will ultimately be safer, more transparent and better able to support Nigeria’s long-term growth.
DAILY TRUST.
