- By Halimah Olamide
Once again, Nigerian financial institutions may be forced to merge as the country’s apex bank on Thursday pegged the minimum capital base at N500bn. The Central Bank of Nigeria, in its announcement, said the N500bn is for banks with international authorisation while those with national authorisation will have N200bn as capital base.
Banks with regional authorisations will have as their minimum capital base, N50bn. A circular signed by the Director, Financial Policy and Regulation Department, Haruna Mustafa, to all commercial, merchant, and non-interest banks and promoters of proposed banks emphasised that all banks are required to meet the minimum capital requirement within 24 months commencing from April 1, 2024, and terminating on March 31, 2026.
CBN spokesperson, Hakama Sidi Ali, confirmed the development in Abuja on Thursday.
According to Ali, the new minimum capital base for commercial banks with national authorisation is now ₦200 billion, while the new requirement for those with regional authorisation is ₦50 billion.
Read the full text of the circular below:
Circular to All Commercial, Merchant and Non-Interest Banks; and Promoters of Proposed Banks REVIEW MINIMUM CAPTIAL REQUIREMENTS FOR OF COMMERCIAL,MERCHANT,A N DNON-INTERESTB A N K SI N NIGERIA
The prevailing macroeconomic challenges and headwinds occasioned by external and domestic shocks have underscored the need for banks to raise and maintain adequate capital to enhance their resilience, solvency and capacity to continue to support the growth of the Nigerian economy.
Consequently, in furtherance of its statutory responsibility to promote a sate, sound and stable banking system and in line with Section 9 of the Banks and Other Financial Institutions Act (BOFIA) 2020, the Central Bank of Nigeria ( C B ) hereby announces an upward review of the minimum capital requirements for commercial, merchant and non-Interest banks in Nigeria as follows: туре Bank of Authorisation Minimum Capital (A’ Billion) Commercial International 500 National 200 50 Regional Merchant National 50 Non-Interest National 20 Regional 10
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To meet the minimum capital requirements, banks may consider any of the following options:
1. Inject fresh equity capital through private placements, rights issue and/or offer for subscription:
2. Mergers and Acquisitions (M&As); and/or
3. Upgrade or downgrade of license authorization.
Accordingly, all banks and promoters of proposed banks are to note the Following: 1. For Existing Banks a. The minimum capital specified above 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.
b. Additional Tier 1 (AT1) Capital shall not be eligible for the purpose of meeting the new requirement.
c. All banks are required to meet the minimum capital requirement within a period of 24 months commencing from April 1, 2024 and terminating on March 31, 2026.
d. Notwithstanding the capital increase, banks are to ensure strict compliance with the minimum capital adequacy ratio (CAR) requirement applicable to their license authorization.
e. In line with extant regulations, banks that breach the CAR requirement shall be required to inject fresh capital to regularize their position.
2. For Proposed Banks
a. The minimum capital requirement shall be paid-up capital.
b. The new minimum capital requirement shall be applicable to all new applications for banking license submitted after April 1, 2024.
c. The C B shall continue to process all pending applications for banking license for which capital deposit had been made and/or Approval-in-Principle (AIP) had been granted.
However, the promoters of such proposed banks shall make up the difference between the capital deposited with the C B and the new capital requirement not later than March 31, 2026.
and Finally, all banks are required to submit an implementation plan (clearly indicating the chosen options) for meeting the new capital requirement and various activities involved with their timelines).
The plan shall be submitted to the Director, Banking Supervision Department, Central Bank of Nigeria, not later than April 30, 2024. The C B will monitor and ensure compliance with the new requirements within the specified timeline above. Please note and be guided accordingly.
For more information on the recapitalization programme, please refer to the attached Frequently Asked Questions (FAQs) or visit the C B website at www.cbn.gov