CBN Releases The banks' Revised Minimum Capital Requirements

THE Central Bank of Nigeria (CBN) announced new minimum capital requirements for banks on Thursday, March 28, 2024. The CBN set the minimum capital base for commercial banks with international authorization at N500 billion, following days of calls for Nigerian banks to accelerate action on the recapitalization of their capital base to strengthen the financial system.

The Acting Director of the Corporate Communications Department, Mrs. Hakama Sidi Ali, confirmed this on Thursday, March 28, 2024, in Abuja. She stated that the new minimum capital base for commercial banks with national authorization is now N200 billion, while the new requirement for those with regional authorization is N50 billion.

Additionally, Mrs. Sidi All revealed that N50 would be the new minimum capital requirement for commercial banks.

Mrs. Sidi All also revealed that non-interest banks with national and regional authorizations would need to have N20 billion and N50 billion in capital, respectively, while merchant banks would need N50 billion.

A letter addressed to all commercial, merchant, and non-interest banks as well as the promoters of proposed banks and signed by Mr. Haruna Mustafa, Director of the Financial Policy and Regulation Department, stressed that all banks must meet the minimum capital requirement within a 24-month period that starts on April 1, 2024, and ends on March 31, 2026.

As per the circular, the first announcement of the action was made by CBN Governor Olayemi Cardoso during his speech at the Annual Bankers' Dinner in November 2023. The aim of the move was to improve the banks' resilience, solvency, and ability to sustainably support the expansion of the Nigerian economy.

The CBN encouraged banks to think about bringing in new equity capital through private placements, rights offerings, and/or subscription offers; mergers and acquisitions (M&As); and/or upgrades or downgrades of license authorization in order to help them satisfy the minimum capital requirements.

The circular also revealed that paid-up capital and share premium alone will make up the necessary capital. It emphasized that the Shareholders' Fund would not serve as the foundation for the increased capital requirement.

“In line with extant regulations, banks that breach the CAR requirement shall be required to inject fresh capital to regularise their position,” it added.

According to the CBN circular, paid-up capital will be the minimum capital requirement for proposed banks. It further stated that any new applications for banking licenses submitted after April 1, 2024 will be subject to the new minimum capital requirement. It stated that all pending applications for banking licenses for which a capital deposit had been made and/or an approval-in-principle (AIP) had been granted would continue to be processed by the CBN.

The promoters of the proposed banks would, however, have until March 31, 2026, to make up the gap between the capital deposited with the CBN and the increased capital requirement.