CBN Governor, Olayemi Cardoso

The Central Bank of Nigeria (CBN) has announced new capital requirements for banks. Commercial banks with international authorization are now required to maintain a minimum capital base of ₦500 billion. A circular signed by the Director of the Financial Policy and Regulation Department, Haruna Mustafa, was sent to all commercial, merchant, and non-interest banks, as well as promoters of proposed banks, to emphasize that the minimum capital requirement must be met within 24 months starting from April 1, 2024, and ending on March 31, 2026.

Five Commercial banks with national authorisation must now have a capital base of ₦200 billion, while those with regional authorisation must have a minimum of ₦50 billion. Merchant banks must also have a minimum capital of ₦50 billion, and non-interest banks with national and regional authorisations must have a minimum capital of ₦20 billion and ₦10 billion, respectively.

The apex bank urged banks to consider fresh equity capital through private placements, rights issues, offers for subscription, mergers and acquisitions, and/or upgrade or downgrade of license authorisation to meet the new minimum capital requirements. The new capital requirement shall comprise only paid-up capital and share premium, not based on the Shareholders’ Fund. Additional Tier 1 (AT1) Capital shall not be eligible for meeting the new requirement. Banks must ensure compliance with the minimum capital adequacy ratio (CAR) requirement applicable to their license authorisation. Banks that breach the CAR requirement shall be required to inject fresh capital to regularise their position, in line with extant regulations.

According to a circular from CBN, all banks are required to submit an implementation plan that indicates the chosen option(s) for meeting the new capital requirement, along with various activities involved and their timelines. This plan must be submitted no later than April 30, 2024. The CBN has also announced that it will monitor and ensure compliance with the new requirements within the specified timeline.

The circular further states that the minimum capital requirement for proposed banks shall be paid-up capital. The new minimum capital requirement will apply to all new applications for banking licenses submitted after April 1, 2024. However, the CBN will continue to process all pending applications for banking licenses for which a capital deposit has been made and/or an Approval-in-Principle has been granted.

If the promoters of such proposed banks have already made a capital deposit with the CBN, they will need to make up the difference between the capital deposited and the new capital requirement no later than March 31, 2026.