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CBN New Minimum Capital Base for commercial Banks Nigeria.

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Ochili Michael
The Central Bank of Nigeria (CBN) has announced new minimum capital requirements for banks in the country. The minimum capital base for commercial banks with international authorization has been set at ₦500 billion ($1.2 billion). Commercial banks with national authorization must have a minimum capital base of ₦200 billion, while those with regional authorization require at least ₦50 billion. Merchant banks are required to have a capital base of ₦50 billion, and non-interest banks with national and regional authorizations must have ₦20 billion and ₦10 billion respectively.

All banks are required to meet the new minimum capital requirement within 24 months, starting from April 1, 2024, and ending on March 31, 2026. The CBN Spokesperson, Hakama Sidi Ali, confirmed the announcement and explained that the new capital requirements aim to strengthen the financial system.
To comply with the new requirements, the CBN has suggested that banks consider options such as injecting fresh equity capital through private placements, rights issues, or offers for subscription. They may also consider mergers and acquisitions or upgrading or downgrading their license authorizations.
     Payment of NBA Abuja branch dues.

The CBN emphasized that the new minimum capital shall consist of paid-up capital and share premium only and should not be based on the Shareholders' Fund. Additional Tier 1 (AT1) Capital is not eligible for meeting the new requirement. Banks that fail to meet the capital adequacy ratio requirement will be required to inject fresh capital to regularize their position.

All banks are required to submit an implementation plan by April 30, 2024, outlining their chosen options for meeting the new capital requirement and specifying the timelines for various activities. The CBN will monitor and ensure compliance with the new requirements within the specified timeline.

The new minimum capital requirement also applies to new applications for banking licenses submitted after April 1, 2024. However, pending applications for banking licenses that have already made a capital deposit with the CBN or have been granted Approval-in-Principle will continue to be processed. Promoters of these proposed banks must fulfill the new capital requirement by March 31, 2026.
This increase in minimum capital requirements for Nigerian banks is aimed at strengthening the financial sector and supporting the country's ambition to become a $1 trillion economy. The last time the CBN raised capital requirements for banks was in 2005, when it was increased from ₦2 billion to ₦25 billion.

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