Banking Sector Recapitalisation: Progress, Challenges and the Road Ahead
As the Nigerian banking sector approaches a critical deadline for recapitalisation, banks are under pressure to meet the requirements set by the Central Bank of Nigeria (CBN). The March 31, 2026 deadline has become a focal point for financial institutions, with many racing to ensure compliance. Recent checks indicate that while 32 banks have already met the new capital requirements, others are still in the process of merging or are under regulatory scrutiny.
This is not the first time the Nigerian banking sector has undergone recapitalisation. In 2004, during the tenure of Prof. Charles Soludo, the minimum capital base for commercial banks was increased from N2 billion to N25 billion. Now, after 22 years, another round of recapitalisation is underway as part of broader efforts to enhance financial stability and resilience.
The current initiative involves raising the minimum capital requirements for different categories of banks. For instance, mega banks with international affiliations must now maintain a capital base of N500 billion, while those with national authorisation require N200 billion. Regional license banks need at least N50 billion. Merchant banks and non-interest banks also face new thresholds, ranging from N50 billion to N10 billion. These changes aim to strengthen the sector’s ability to withstand economic shocks and support long-term growth.
Recapitalisation Timeline and Compliance
The CBN released its circular on the review of minimum capital requirements in March 2024, setting a 24-month timeline for compliance that ends on March 31, 2026. This timeline allows banks sufficient time to raise the necessary capital. According to available data, the total capital raised under the ongoing recapitalisation could reach about N6 trillion, with more than N1.5 trillion in pending deals expected to materialise before the deadline.
At the recent Monetary Policy Forum, the CBN governor, Mr. Olayemi Cardoso, confirmed that 32 banks had fully met their new minimum capital requirements. He highlighted that this achievement has significantly strengthened the resilience and capacity of the Nigerian banking system. However, he also reiterated that the March 31 deadline is non-negotiable, emphasizing the importance of maintaining financial stability and regulatory standards.
Mergers and Regulatory Interventions
Despite the progress made, some banks are still navigating challenges. The CBN Governor hinted that three banks under regulatory intervention—Polaris Bank, Union Bank of Nigeria, and Keystone Bank—may not adhere to the same timeline due to legal and structural issues. Cardoso stressed the need for an orderly and credible outcome while ensuring financial stability.
He also noted that the verified and approved capital raised by banks stood at N4.05 trillion as of February 19, 2026. Of this, N2.90 trillion came from within Nigeria, while $706.84 million, equivalent to N1.15 trillion, came from foreign investors.
Banks Under Regulatory Scrutiny
The CBN’s list of deposit money banks includes 36 institutions as of April 26, 2024. These include seven banks with international authorisation, such as Access Bank Limited, Fidelity Bank, and FirstBank Nigeria Limited. Commercial banks with regional licenses, like Providus Bank and SunTrust Bank, are also part of the landscape. Non-interest banks, including Jaiz Bank and Taj Bank, are included in the regulatory framework.
Operators’ Perspectives
The Group Managing Director of United Bank for Africa (UBA), Oliver Alawuba, described the CBN’s recapitalisation policy as timely and essential. He emphasized that the initiative would boost the resilience of the banking sector by strengthening its capacity to withstand economic shocks. Alawuba also highlighted the importance of positioning Nigerian banks to finance large-scale infrastructure and industrial projects.
He added that the policy is a forward-looking strategy aimed at equipping Nigerian banks to operate at the scale and sophistication required by a trillion-dollar economy. This move, he said, would enhance the sector’s ability to support traditional economic drivers and emerging sectors such as fintech and green energy.
Why Recapitalisation Matters
In 2024, net domestic credit by banks stood at N105.88 trillion. Personal and private sector loans reached N470 billion in Q4 2024, and up to September 2024, 90% of loans were issued by microfinance banks. Manufacturers accessed N68.7 trillion in bank loans between January and September 2025, contributing to a 4.25% economic growth in Q2 2025.
Experts note that higher capital bases and liquidity requirements reduce the rate of bank failures. A banking crisis typically occurs every 20 to 25 years, making recapitalisation a critical tool for maintaining stability.
Linking Banks to the Real Economy
The Centre for the Promotion of Private Enterprises (CPPE) commended the recapitalisation exercise but urged banks to focus on connecting with real sectors of the economy. Dr. Muda Yusuf, Executive Director at CPPE, pointed out that while the recapitalisation has strengthened the banking system, there remains a weak link between the financial system and productive sectors.
Private sector credit as a percentage of GDP in Nigeria is still only 17%, compared to a sub-Saharan African average of 25%. This gap highlights the need for better financial intermediation and more aligned credit structures.
Looking Ahead
Economist Prof. Uche Uwaleke praised the success of the recapitalisation so far, noting that 32 out of 36 banks have met the new requirements. He also highlighted the positive impact on the capital market, with over N4 trillion raised so far. However, he cautioned that the CBN must shift focus from capital raising to risk supervision.
Key areas to watch include potential overexposure to high-risk sectors, governance lapses, and aggressive lending practices. The CBN must ensure that the new capital translates into productive lending rather than speculative activity.
Conclusion
The Nigerian banking sector is at a pivotal moment. While significant progress has been made, the road ahead requires continued vigilance, regulatory oversight, and a focus on supporting the real economy. The success of this recapitalisation will ultimately be measured by its impact on economic growth and financial stability, not just the amount of capital raised.
