CBN Imposes N500bn As New Recapitalization On Commercial Banks

Daud Olatunji

The Central Bank of Nigeria (CBN) has imposed a new recapitalization requirement of N500 billion on commercial, merchant, and non-interest banks .

 This development comes amidst the backdrop of prevailing macroeconomic challenges and various external and domestic shocks.

In a statement signed by Haruna Mustafa, the Director of the Financial Policy and Regulation Department at the CBN, the apex bank highlighted the necessity of this increase to bolster the resilience, solvency, and capacity of banks in supporting the growth of the Nigerian economy.

Under the new guidelines, commercial banks with international licenses are required to increase their capital base to N500 billion, while national and regional financial institutions must raise theirs to N200 billion and N50 billion, respectively. Similarly, merchant banks seeking national licenses are mandated to meet a minimum capital requirement of N50 billion.

Furthermore, the CBN has stipulated that national and regional non-interest banks must maintain capital bases of N20 billion and N10 billion, respectively.

To assist banks in meeting these revised capital requirements, the CBN has provided various options, including the injection of fresh equity capital through private placements, rights issues, or offers for subscription. 

Additionally, the apex bank has suggested merger and acquisition activities, as well as the possibility of upgrading or downgrading licenses.

In terms of existing banks, the CBN clarified that the minimum capital requirement comprises paid-up capital and share premium only, excluding additional tier 1 (AT1) capital. 

Banks are granted a 24-month window, commencing from April 1, 2024, to comply with the new capital regulations, ensuring strict adherence to minimum capital adequacy ratio (CAR) requirements along the way.

For proposed banks, the CBN outlined that the new minimum capital requirement applies to all new applications submitted after April 1, 2024.

 The apex bank will continue processing pending applications for banking licenses, provided that the promoters fulfill the difference between the deposited capital and the new capital requirement by March 31.

To ensure smooth implementation, all banks are required to submit an implementation plan detailing their chosen options for meeting the new capital requirements.

 This plan must be submitted to the Director of the Banking Supervision Department at the CBN by April 30, 2024.

The CBN reaffirmed its commitment to monitoring and enforcing compliance with these new requirements within the specified timeline, underscoring the importance of a robust banking sector in driving Nigeria’s economic growth and stability.

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