The Nigerian banking sector is currently going through a major shift, and it’s hard not to notice. In March 2024, the Central Bank of Nigeria (CBN) rolled out a new recapitalization policy that’s already changing the way banks operate. Basically, the CBN wants banks to raise their minimum capital base by 2026.
The idea is to make sure our financial institutions are strong enough to support Nigeria’s long-term economic goals especially the big dream of hitting a $1 trillion Gross domestic product (GDP) by 2030.
This isn’t the first time something like this has happened. Back in 2004, when Professor Charles Soludo was the CBN Governor, banks were told to raise their capital to ₦25 billion. That move led to a wave of mergers and acquisitions, and the number of banks dropped from 89 to just 25. The current policy feels similar, but the stakes are higher now. With inflation, currency issues, and global financial pressures, the CBN believes banks need to be more resilient than ever.
So what exactly is this minimum capital base? In simple terms, it’s the least amount of money a bank must have in its core capital to be allowed to operate. And the CBN isn’t joking around only paid- up share capital and share premium count. That means banks can’t include things like retained earnings or reserves. The goal is to make sure the capital is real and can actually absorb losses if things go south.
Here’s how the new requirements break down: international commercial banks now need ₦500 billion, national banks need ₦200 billion, and regional banks need ₦50 billion. For non- interest banks, it’s ₦20 billion for national licenses and ₦10 billion or regional ones. These figures are huge, and not every bank can meet them easily.
Big banks like Zenith, Access, and GTCO probably won’t struggle too much they already have strong financial backing and investor support. But smaller banks, especially Tier-2 ones, are under serious pressure. Many of them will need to raise billions of naira, and that’s not something you can do overnight. That’s why we’re seeing a rise in mergers and acquisitions. Some banks are teaming up to meet the new requirements, while others are considering downgrading their licenses or even exiting the market.
To make sure banks follow through, the CBN has set up a phased approach. Banks have to submit their recapitalization plans and show progress over time. Other regulators like the SEC and FCCPC are also involved, keeping an eye on capital-raising activities and merger deals. The CBN has made it clear, there won’t be any deadline extensions. If a bank doesn’t meet the requirements by March 2026, it could lose its license, Since the policy was announced, Merger and Acquisition activity has picked up.
Banks that can’t meet the requirements on their own are looking for partners. It’s similar to what happened in 2004, but this time the market is more complex. One of the biggest deals so far is the merger between Union Bank and Titan Trust Bank. Together, they now have over ₦2 trillion in assets. Another example is the ongoing merger talks between Providus Bank and Unity Bank, backed by a ₦700 billion support package.
There are a few key reasons why banks are merging. First, they need to meet the new capital requirements. Second, mergers help them expand their customer base and market share. Third, combining resources can reduce costs and improve efficiency. And finally, regulators are encouraging consolidation to create stronger institutions. Most of these mergers are structured as equity swaps, where shareholders of one bank get shares in the new entity. Some deals also involve selling off assets or forming holding companies. These strategies help banks stay compliant while still growing.
Of course, there are rules. The FCCPC and SEC oversee these deals to make sure everything is transparent and fair. They want to protect shareholders and prevent monopolies. The CBN also reviews each merger to make sure it supports financial stability and economic growth.
While all this change brings opportunities, there are risks too. On the bright side, stronger banks can offer better services, expand into new regions, and support big projects. Consolidation can also lead to better technology and risk management. But there are downsides; job losses from restructuring, cultural clashes between merging banks, and reduced competition. If a big bank fails, it could affect the whole system.
Looking at real, life examples helps make sense of it all. The Union Bank and Titan Trust Bank merger shows how two institutions can come together to meet regulatory demands and grow stronger. The Providus and Unity Bank deal is still in progress, but it’s a good example of how recapitalization is driving strategic decisions. To make sure this whole process works, a few things need to happen. Regulators should offer incentives for banks that merge voluntarily. Banks should start planning early instead of waiting till the last minute. Investors need to be smart about where they put their money. And the CBN should keep things transparent and give regular updates so everyone knows what’s going on.
In the end, the CBN’s recapitalization policy is a bold move. It’s pushing banks to become stronger and more capable of supporting Nigeria’s future. Yes, it’s a tough challenge especially for smaller banks but it’s also a chance to innovate and grow. Mergers and acquisitions are becoming a key strategy, and the regulatory environment is adapting to support that. As the 2026 deadline gets closer, everyone involved needs to act fast and smart. If they do, Nigeria’s banking sector could come out of this stronger, more resilient, and ready to help drive national development.
Bibliography
• Central Bank of Nigeria, Circular on New Minimum Capital Requirements for Commercial, Merchant, and Non-Interest Banks (2024)
• C Soludo, Consolidating the Nigerian Banking Industry: Speech by the Governor of the CBN (2004)
• BusinessDay, ‘CBN’s Recapitalisation Policy Sparks M&A Wave Among Nigerian Banks’ (2024)
• Nairametrics, ‘Union Bank and Titan Trust Bank Complete Merger Deal’ (2024)
• Nairametrics, Providus Bank and Unity Bank Merger’ (2025)
• Federal Competition and Consumer Protection Commission (FCCPC), Guidelines on Mergers and Acquisitions (2024)
• Securities and Exchange Commission Nigeria, Capital Market Rules and M&A Oversight (2024)
• Punch Newspapers, ‘CBN Sets March 2026 Deadline for Bank Recapitalisation’ (2024)
By Ayodele Efemena,
Intern,
Popoola-Taiwo LP