The Central Bank of Nigeria (CBN) has introduced fresh guidelines aimed at reinforcing the financial stability of Deposit Money Banks (DMBs) across the country. In a statement released from Abuja on Thursday, the CBN detailed the updated requirements for banks to bolster their capital bases.
Acting Director of Corporate Communications at the CBN, Sidi Ali, highlighted the key provisions of the new policy, indicating that commercial banks with international authorization must elevate their capital base to N500 billion, while national banks are mandated to reach N200 billion.
Ali stated, “Commercial banks with national licenses must meet a N200 billion threshold, while those with regional authorization are expected to achieve a N50 billion capital floor.” Non-interest banks were also included in the directive, with national and regional branches required to increase their capital to N20 billion and N10 billion, respectively.
This initiative follows closely on the heels of recent deliberations by the Monetary Policy Committee (MPC) regarding the necessity of enhancing the capitalization of the nation’s banks. CBN Governor Olayemi Cardoso emphasized the urgency for DMBs to fortify their financial foundations during a press briefing following the 294th MPC meeting.
“The industry remains safe, sound, and stable,” remarked Cardoso. “However, to guard against risk, commercial banks in the country should accelerate their recapitalization efforts.”
The decision to raise capital requirements comes amid broader economic objectives outlined by the Nigerian government, including aspirations to achieve a $1 trillion economy by 2026. Speaking at the 58th Annual Bankers’ Dinner in November 2023, Cardoso underscored the pivotal role of the banking sector in supporting this ambitious agenda.
Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, commended the move, citing the necessity of adapting capital requirements to reflect current economic realities. Meanwhile, Professor Uche Uwaleke of Nasarawa State University emphasized the importance of incentivizing banks rather than resorting to coercion in the recapitalization process.
In response to the CBN’s directive, all banks are mandated to submit implementation plans outlining their strategies for meeting the new capital requirements by April 30, 2024. The CBN reaffirmed its commitment to monitoring compliance and ensuring the timely execution of the new policy measures.