JUST IN: CBN Announces New Minimum Capital Requirements for Banks: N500bn and N200bn, Issues Deadline

In a bid to bolster the resilience and stability of Nigeria’s financial system, the Central Bank of Nigeria (CBN) has unveiled new minimum capital requirements for banks. The announcement, made on Thursday, March 28, 2024, introduces significant increases in capital thresholds for various categories of banks.

According to Mrs. Hakama Sidi Ali, Acting Director of the Corporate Communications Department, commercial banks with international authorization must now maintain a minimum capital base of N500 billion. Similarly, commercial banks with national authorization are required to have a minimum capital base of N200 billion, while those with regional authorization must maintain a minimum of N50 billion.

The new requirements also apply to other banking institutions, including merchant banks, which must now maintain a minimum capital base of N50 billion. Non-interest banks with national and regional authorizations are mandated to have minimum capital bases of N20 billion and N10 billion, respectively.

In a circular addressed to all commercial, merchant, and non-interest banks, as well as promoters of proposed banks, Mr. Haruna Mustafa, Director of the Financial Policy and Regulation Department, emphasized that banks must meet these new minimum capital requirements within 24 months. The deadline for compliance is set to commence from April 1, 2024, and end on March 31, 2026.

The CBN’s decision comes as a follow-up to remarks made by CBN Governor Olayemi Cardoso during the Annual Bankers’ Dinner in November 2023. The objective is to enhance the solvency and capacity of banks to support Nigeria’s economic growth.

To facilitate compliance, banks are encouraged to explore various avenues such as private placements, rights issues, mergers and acquisitions (M&As), or license authorization upgrades or downgrades to inject fresh equity capital. However, the minimum capital requirement will solely comprise paid-up capital and share premium, excluding Additional Tier 1 (AT1) Capital.

The CBN has mandated all banks to submit an implementation plan outlining their chosen strategies for meeting the new capital requirement by April 30, 2024. Additionally, the regulatory body will closely monitor and ensure compliance with the new requirements within the specified timeline.

In related news, the CBN clarified that the new minimum capital requirement will also apply to all new applications for banking licenses submitted after April 1, 2024. Existing pending applications will be processed, with promoters required to bridge any capital gaps by March 31, 2026.