July 21, 2024

Breaking: Central Bank of Nigeria Increases Minimum Capital Base For Banks

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Central Bank, Abuja

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By Reporter

The Central Bank of Nigeria (CBN) has unveiled new minimum capital requirements for banks, pegging the minimum capital base for commercial banks with international authorisation at ₦500 billion and the capital base for commercial banks with national authorisation to ₦200 billion.

A circular signed by the Director, Financial Policy and Regulation Department, Haruna Mustafa, to all commercial, merchant, and non-interest banks and promoters of proposed banks emphasised that all banks are required to meet the minimum capital requirement within 24 months commencing from April 1, 2024, and terminating on March 31, 2026.

CBN spokesperson, Hakama Sidi Ali, confirmed the development in Abuja on Thursday.

According to the statement, the new minimum capital base for commercial banks with national authorisation is now ₦200 billion, while the new requirement for those with regional authorisation is ₦50 billion.

The apex bank also disclosed that the new minimum capital for merchant banks would be ₦50 billion, while the new requirements for non-interest banks with national and regional authorisations are ₦20 billion and ₦10 billion, respectively.

The announcement comes just days after CBN Governor, Olayemi Cardoso, urged deposit money banks to expedite action on the recapitalisation of their capital base in order to strengthen the financial system.

According to the circular, to meet the minimum capital requirements, the CBN has urged banks to consider injecting fresh equity capital through private placements, rights issues, and/or offers for subscription; to pursue Mergers and Acquisitions (M&As); and/or to consider upgrading or downgrading their license authorisation.

Additionally, the circular revealed that the minimum capital will consist solely of paid-up capital and share premium. It emphasized that the new capital requirement would not be based on the Shareholders’ Fund.

“Additional Tier 1 (AT1) Capital will not be eligible for meeting the new requirement. Despite the increase in capital, banks must ensure strict compliance with the minimum Capital Adequacy Ratio (CAR) requirement applicable to their license authorisation,” the circular stated.

It added that banks falling short of the CAR requirement would be mandated to inject fresh capital to rectify their standing.

The CBN circular stated that the minimum capital requirement for proposed banks would be the paid-up capital.

The new minimum capital requirement will apply to all new applications for banking licenses submitted after April 1, 2024.

The circular also mentioned that the CBN would continue to process all pending applications for banking licenses where a capital deposit has been made and/or an Approval-in-Principle (AIP) has been granted.

Nonetheless, it stipulated that the promoters of such proposed banks must cover the difference between the capital deposited with the CBN and the new capital requirement by no later than March 31, 2026.

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