The Central Bank (CBN) announced an increase in the capital base for all categories of banks on Thursday, March 26, 2024, in the country.
The CBN’s Acting Director of Corporate Communications, Hakama Ali, made a statement saying that the capital base of all banks with international empowerment had been increased to N500 billion whereas that of national banks/ local banks was increased to 200 Billion.
The CBN also brought to our notice that all commercial banks with regional authorisation are expected to acquire a N50 billion capital base. With no discrepancy, all merchant banks are required to raise up their capital to N50 billion as the minimum capital requirement.
The Central bank directed non-interest banks with national and regional authorisations to increase their capital to at least N20 billion and N10 billion, irrespective of the odds.
The CBN also informed us that all banks are expected to meet the minimum capital target within 24 months, starting on April 1 and ending on March 31, 2026.
With reference to the banking industry regulator, the policy was enacted “with respect to its statutory duties to build a safe, sound, and stable banking system that is in line with Section 9 of the Banks and Other Financial Institutions Act (BOFIA) 2020,” the report said.
The Governor of the central bank Olayemi Cardoso, the highest bank chairman, is on a move to assist President Bola Tinubu accomplish his dream of rising a $1 trillion economy come 2030 and had entreated other sub banking brands to join the vision as early as last November 2023, for a capital raise that will help them promote capital adequacy and accelerate an economy that has since been seen as sluggish and has been at a static growth level after surviving a recession since three years ago.
With Thursday’s directive, all banks are left with options like seeking new equity capital by means of private placements, rights issues, and/or offers for subscriptions, mergers & acquisitions, and/or upgrades or downgrades of licence authorization.
For already existing banks, the minimum capital “shall includes paid-up capital and share premium only. To avoid the issue of doubt, the new capital expectation shall not be dependent on shareholders’ funds,” The Apex bank said.
The Central Bank of Nigeria further said that additional Tier 1 capital—this type of capital that represents the main equity assets of a bank—does not qualify to meet the new requirement.
Any Lenders bank that defaults the capital adequacy ratio expectation will have to input fresh capital to regularise their position, Central Bank said.
They continued by saying that all new requests for banking permits submitted after April 1, 2024, have to blend with the new minimum capital needs.
The Central Bank instructed all banks to submit an implementation plan showing the approved option for attending to the Central Bank’s new capital needs to the Director of the Banking Supervision Department of the bank by the end of next month.
Discover more from Infodorm
Subscribe to get the latest posts sent to your email.