Nigeria’s Central Bank (CBN) announced a significant increase in the minimum capital requirements for banks operating in the country. This move aims to strengthen the financial system and prepare banks for future challenges.
The biggest increase applies to banks with international authorization, which must now hold a minimum capital base of N500 billion (around $1.2 billion).
National banks need to reach N200 billion (around $480 million), while regional banks have a new target of N50 billion (around $120 million). Non-interest banks also see a capital increase based on their license type.
This policy change comes after the Monetary Policy Committee (MPC) urged banks to strengthen their capital base. This is the first major capital base increase since 2004, when the CBN raised the minimum from N2 billion to N25 billion. Back then, the reform led to a wave of mergers and acquisitions, consolidating the banking sector.
The CBN hopes this recapitalization will bolster the banking industry’s ability to support Nigeria’s ambitious goal of becoming a $1 trillion economy by 2026.
This policy is likely to lead to further consolidation within the banking sector, with smaller banks potentially merging with larger ones to meet the new requirements. It should also improve Nigerian banks’ overall stability and risk management capabilities.
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