More Banks to Merge as Report Says CBN May Raise Capital Base of Access, Zenith, Others to N900bn

• A new report has said that the Central Bank of Nigeria may raise commercial banks’ capital base to support the government's vision
• The report stated the apex bank may require some commercial banks to increase their capital bases to N900 billion
• The development follows a statement by the CBN that it requires banks to increase their capital to support the vision of a $1 trillion economy

Pascal Oparada has over a decade of experience covering Tech, Energy, Stocks, Investments, and Economy.

A new report has forecasted that the Central Bank of Nigeria may require commercial banks with international banking licenses to increase their capital base to over N900 billion.

The development comes months after the governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, said the bank would be asking commercial banks in the country to raise more capital to support the federal government’s plan to grow the economy to $1 trillion.

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Nigerian banks with international licenses to have higher capital bases

Per the Banking Sector Full Year (FY) 2024 Outlook by CardinalStone Securities, Nigerian banks may be asked to shore up their capital bases, with forecasts showing an increase ranging from N181.85 billion for regional banking licenses to N909 billion for international banking licenses.

Punch said the report based the projection on the prospects of the apex bank returning to the dollar ratios of capita bases-to-GDP set in 2005.

According to the report, the ratios ranged from 0.04% for regional banks to 0.22% for commercial banks.

The report stated that the vision of achieving a $1 trillion economy in seven years may need higher capital base requirements.

UBA, Zenith, Access may scale hurdle

It stated that there had been a significant decline from the 2005 recapitalization exercise as the requirements which were 0.04 to 0.22% of the GDP in dollar terms declined to between 0.00% to o.01% of the GDP in dollar terms.

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The report said most tier-1 banks in Nigeria such as Zenith Bank, UBA, and Access Bank, which have crossed the N1 trillion in market cap, may likely scale the hurdle.

No more N25bn: CBN to increase Nigerian banks' recapitalisation

Legit.ng reported that the governor of the Central Bank of Nigeria (CBN), Olayemi Michael Cardoso, told Nigerian banks to prepare for a new round of banking sector recapitalization as the nation works towards the $1 trillion Gross Domestic Product (GDP) target.

He said this at the 58th Annual Bankers Dinner by the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos.

It could be recalled that the last banking recapitalisation in 2004 saw banks increase their capital base from N2 billion to the current N25 billion.

Source: Legit.ng