With eight Nigerian banks already meeting the new capital thresholds and others accelerating their efforts ahead of a March 2026 deadline, the Central Bank of Nigeria (CBN) has reaffirmed its commitment to preserving financial system stability through heightened regulatory oversight and sector reforms.
In a statement issued following the latest Monetary Policy Committee (MPC) meeting, the apex bank described the domestic banking sector as resilient and well-positioned to withstand shocks, citing positive trends in Financial Soundness Indicators (FSIs) and improved macroprudential metrics.
“The Nigerian banking sector remains safe, sound, and resilient,” the CBN said, noting that existing frameworks for risk-based supervision and early warning systems remain robust. “We continue to monitor institutions closely and are prepared to act swiftly to address emerging risks.”
The regulatory push follows the CBN’s March 2024 announcement of a two-year recapitalisation programme, requiring banks to significantly raise their minimum capital bases. Commercial banks with international licences must meet a ₦500 billion threshold, while those with national and regional licences are expected to attain ₦200 billion and ₦50 billion respectively. Merchant banks are required to hold ₦50 billion, while non-interest banks must hold ₦20 billion (national) or ₦10 billion (regional).
The move, according to CBN Governor Olayemi Cardoso, is not only designed to enhance systemic resilience but also to align the banking sector with Nigeria’s broader ambition of achieving a $1 trillion economy by 2030.
“Will Nigerian banks have sufficient capital to support a $1 trillion economy? In my opinion, the answer is no, unless we act,” Cardoso stated. “The recapitalisation drive is aimed at positioning banks to finance transformative economic growth, deepen financial intermediation, and support large-scale investments.”
Cardoso added that the recapitalisation policy would unlock greater credit access for micro, small and medium enterprises (MSMEs), promote innovation in digital finance, and expand financial inclusion across underserved and rural communities.
Sector Responds Proactively
Bank executives have largely welcomed the initiative, with several institutions already raising capital through rights issues and public offerings. According to Cardoso, the majority of banks are on track to meet the 2026 deadline, while some have already surpassed the capital requirements.
Stress tests conducted by the apex bank showed that key sector indicators remain within regulatory thresholds. The non-performing loan (NPL) ratio is below the prudential benchmark of 5%, while the average liquidity ratio exceeds the 30% floor, reflecting strong risk management practices.
Despite having shareholders’ funds in excess of the new minimum capital base, many banks are still required to raise fresh capital due to the CBN’s revised definition, which excludes retained earnings and other reserves, focusing solely on paid-up share capital and share premium.
Sector Consolidation Likely
Olubukola Akinwunmi, Director of Banking Supervision at the CBN, said while most banks are focused on individual recapitalisation efforts, merger and acquisition (M&A) activity remains a possibility.
“Banks are actively pursuing their capital raising plans, but as the process evolves, we expect strategic alignments, partnerships, and possibly M&As,” he said.
Market analysts say the recapitalisation initiative could reshape Nigeria’s financial sector by creating stronger, more competitive banks capable of financing infrastructure, industry, and innovation at scale.
Oliver Alawuba, Group Managing Director of United Bank for Africa (UBA), said the policy is a strategic imperative for economic transformation. “Adequately capitalised banks will be in a better position to withstand macroeconomic shocks and fund critical sectors such as infrastructure, manufacturing, green energy, and fintech,” he noted.
He also highlighted the disparity between Nigeria and more advanced markets in terms of banking sector depth. “Banking sector assets in developed economies account for between 70% and 150% of GDP. In Nigeria, it’s less than 12%,” Alawuba said. “To meet the needs of a trillion-dollar economy, Nigerian banks must grow significantly in scale and sophistication.”
Supporting Institutions Beyond Commercial Banks
The CBN is also looking beyond commercial banks to reinforce Other Financial Institutions (OFIs), including microfinance banks and primary mortgage institutions. The central bank is working to integrate these institutions into digital platforms like the Global Standing Instruction (GSI) system to improve loan recovery and reduce default rates.
“Strengthening OFIs will unlock access to credit for underserved segments and catalyse grassroots economic activity,” Cardoso noted.
He added that reforms such as model mortgage foreclosure laws and enhanced partnerships with Development Finance Institutions (DFIs) would expand long-term lending and financial inclusion.
CBN Deputy Governor for Corporate Services, Emem Usoro, said Nigeria’s path to a $1 trillion economy depends on the strength of its financial system. “Capital adequacy will determine the ability of our banks to finance national development goals,” she said during a recent engagement in Abuja.
Usoro also stressed the importance of aligning public and private sector interests in achieving macroeconomic targets, urging all stakeholders to play an active role in the recapitalisation process.
Enforcement and Compliance
The CBN has also stepped up enforcement actions to ensure compliance with regulatory standards. In recent months, it imposed over ₦15 billion in fines on 29 banks for infractions including anti-money laundering (AML) and counter-terrorist financing (CFT) breaches.
“These penalties are not just punitive, they’re designed to drive internal reforms and prevent future lapses,” a CBN statement noted. “Institutions are expected to address root causes and strengthen compliance frameworks to improve risk management and operational integrity.”
As the 2026 deadline approaches, the recapitalisation programme is expected to enhance the sector’s shock-absorption capacity, improve monetary policy transmission, and better position Nigerian banks for global competitiveness.
While challenges remain, including inflationary pressures, currency volatility, and uneven access to capital; the CBN’s proactive stance signals a clear commitment to reinforcing trust and investor confidence in Nigeria’s banking system.