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CBN Sets New Minimum Capital Requirements for Banks

The Central Bank of Nigeria (CBN) has introduced revised minimum capital requirements for banks, setting the minimum capital base for commercial banks with international authorization at ₦500 billion.

In a circular addressed to all commercial, merchant, and non-interest banks, as well as promoters of proposed banks, the Director of the Financial Policy and Regulation Department, Haruna Mustafa, emphasized that banks must meet these new capital requirements within a 24-month period. This period starts on April 1, 2024, and concludes on March 31, 2026.

CBN spokesperson Hakama Sidi Ali confirmed this development in Abuja on Thursday. He further detailed that the new minimum capital base for commercial banks with national authorization has been adjusted to ₦200 billion. Meanwhile, banks with regional authorization are now required to maintain a minimum capital base of ₦50 billion.

Merchant banks are expected to maintain a minimum capital base of ₦50 billion. Additionally, non-interest banks with national and regional authorizations are required to maintain capital bases of ₦20 billion and ₦10 billion, respectively.

This announcement follows recent remarks by CBN Governor Olayemi Cardoso, urging deposit money banks to hasten the recapitalization of their capital bases to bolster the financial system. Last November, shortly after assuming office, Cardoso had indicated that commercial banks would be directed to enhance their capital base to align with the $1 trillion economic ambition of President Bola Tinubu’s administration.

The previous adjustment to the capital base was in 2005 under the leadership of the then CBN Governor, Charles Soludo, raising it from ₦2 billion to ₦25 billion.

To assist banks in meeting these new requirements, the CBN recommended several strategies. These include injecting fresh equity capital through private placements, rights issues, or offers for subscription; engaging in mergers and acquisitions; and upgrading or downgrading license authorizations.

The CBN clarified that the new minimum capital should consist solely of paid-up capital and share premium, excluding the Shareholders’ Fund. Additionally, Additional Tier 1 (AT1) Capital will not be considered for meeting the new requirement. Banks are also reminded to strictly adhere to the minimum capital adequacy ratio (CAR) applicable to their license authorization. Banks failing to meet the CAR requirement will be mandated to inject additional capital to rectify their position.

Furthermore, the CBN instructed all banks to submit an implementation plan outlining their chosen strategies for meeting the new capital requirements, along with associated timelines, by April 30, 2024. The CBN will monitor and ensure compliance with these new requirements within the stipulated timeframe.

For proposed banks, the minimum capital requirement will be in the form of paid-up capital. This new requirement will be applicable to all new banking license applications submitted after April 1, 2024. The CBN will continue processing pending applications for banking licenses for which a capital deposit has been made or an Approval-in-Principle has been granted. However, promoters of such proposed banks must bridge the gap between the deposited capital and the new capital requirement by March 31, 2026.


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