Mergers and Acquisitions Imminent as CBN Sets N500bn Minimum Capital Base for Banks

The Central Bank of Nigeria (CBN) has announced new minimum capital requirements for banks, setting the minimum capital base for commercial banks with international authorization at ₦500 billion. This move is aimed at strengthening the banking sector and ensuring financial stability.

In a circular addressed to all commercial, merchant, and non-interest banks, as well as promoters of proposed banks, the CBN stated that banks are required to meet the new minimum capital requirement within 24 months, starting from April 1, 2024, and ending on March 31, 2026.

CBN spokesperson, Hakama Sidi Ali, confirmed the development in Abuja, stressing that commercial banks with national authorization are now required to have a minimum capital base of ₦200 billion, while those with regional authorization must have ₦50 billion.

Merchant banks are expected to maintain a minimum capital base of ₦50 billion, and non-interest banks with national and regional authorizations are required to have ₦20 billion and ₦10 billion, respectively.

The CBN also advised banks to consider various options to meet the new capital requirements, such as injecting fresh equity capital through private placements, rights issues, or offers for subscription, as well as through mergers and acquisitions, or by upgrading or downgrading their license authorization.

The new minimum capital shall comprise paid-up capital and share premium only, and banks are required to ensure strict compliance with the minimum capital adequacy ratio (CAR) requirement applicable to their license authorization.

Banks that breach the CAR requirement will be required to inject fresh capital to regularize their position.

Furthermore, all banks are required to submit an implementation plan, clearly indicating the chosen options for meeting the new capital requirement and various activities involved, with their timelines no later than April 30, 2024.

The CBN will monitor and ensure compliance with the new requirements within the specified timeline.The minimum capital requirement for proposed banks shall be paid-up capital, and the new minimum capital requirement shall apply to all new applications for banking licenses submitted after April 1, 2024. Promoters of proposed banks with pending applications must make up the difference between the capital deposited with the CBN and the new capital requirement no later than March 31, 2026.

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