Central Bank of Nigeria (CBN) has announced an upward review of the minimum capital requirements for commercial, merchant and non-interest banks.

In a statement on Thursday, CBN said the increase was necessary due to prevailing macroeconomic challenges and headwinds occasioned by external and domestic shocks.

The statement was signed by Haruna Mustafa, director, financial policy and regulation department.

According to the apex bank, the upward review will enhance their resilience, solvency and capacity to continue to support the growth of the Nigerian economy.

CBN increased the capital base for commercial banks with international licences to N500 billion, while national and regional financial institutions’ capital bases were pegged at N200 billion and N50 billion, respectively.

Also, CBN raised the merchant bank minimum capital requirement to N50 billion for national licence holders.

The financial regulator said the capital base for national and regional non-interest banks is N20 billion and N10 billion, respectively.

To meet the minimum capital requirements, CBN advised banks to consider the injection of “fresh equity capital through private placements, rights issue and/or offer for subscription”.

CBN also suggested merger and acquisition (M&A), as well as upgrade or downgrade of licences.

OTHER REQUIREMENTS FOR EXISTING BANKS

• The minimum capital specified above shall comprise paid-up capital and share premium only. For the avoidance of doubt, the new capital requirement shall not be based on shareholders’ funds.
• Additional tier 1 (AT1) capital shall not be eligible for the purpose of meeting the new requirement.
• All banks are required to meet the minimum capital requirement within a period of 24 months commencing from April 1, 2024 and terminating on March 31, 2026.
• Notwithstanding the capital increase, banks are to ensure strict compliance with the minimum capital adequacy ratio (CAR) requirement applicable to their license authorization.
• In line with extant regulations, banks that breach the CAR requirement shall required to inject fresh capital to regularise their position.

OTHER REQUIREMENTS FOR PROPOSED BANKS

• The minimum capital requirement shall be paid-up capital.
• The new minimum capital requirement shall be applicable to all new applications for banking licences submitted after April 1, 2024.
• The CBN shall continue to process all pending applications for banking licences for which capital deposit had been made and/or approval-in-principle (AIP) had been granted. However, the promoters of such proposed banks shall make up the difference between the capital deposited with the CBN and the new capital requirement not later than March 31

CBN said all banks are required to submit an implementation plan, clearly indicating the chosen option{s) for meeting the new capital requirement and various activities involved with their timelines.

“The plan shall be submitted to the Director, Banking Supervision Department, Central Bank of Nigeria, not later than April 30, 2024,” the apex bank said.

CBN said it will monitor and ensure compliance with the new requirements within the specified timeline above.

The Cable