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By Chinwendu Obienyi
The ongoing recapitalisation exercise is redrawing the map of Nigeria’s banking sector as the Central Bank pushes lenders to scale up, clean up and fortify their balance sheets.
With tougher oversight, tighter risk management and trillions of naira in fresh capital, the reform, driven by the CBN Governor, Olayemi Cardoso, is designed to end past boom-and-bust cycles and deliver banks strong enough to power investment, stability and sustainable economic growth.
With at least 20 banks already meeting the new minimum capital requirements and others progressing steadily toward compliance, the exercise is emerging as a defining test of regulatory resolve and market confidence. Analysts say the scale and structure of the recapitalisation underscore the regulator’s determination to entrench higher standards, align Nigeria’s banking system with global best practices, and insulate the economy from recurring financial shocks.
At its core, the recapitalisation drive is about strengthening the foundations of the financial system. By compelling banks to raise fresh capital and improve governance, the CBN aims to ensure that lenders have the balance-sheet strength to absorb shocks, finance large projects and support Nigeria’s ambition of building a $1 trillion economy.
Vision anchored on stability and growth
For Cardoso, a resilient financial system is not optional; it is the bedrock of sustainable economic growth. Since assuming office, he has repeatedly stressed that Nigeria’s development goals cannot be achieved without strong, well-capitalised banks capable of intermediating savings into productive investment.
The CBN’s approach reflects a broader policy alignment between monetary and fiscal authorities, with the regulator keen on ensuring that financial sector reforms complement the government’s growth agenda. By raising capital thresholds and tightening supervision, the apex bank is seeking to position Nigerian banks as credible partners in financing businesses, infrastructure and industrial expansion.
Beyond capital, Cardoso has made it clear that the recapitalisation programme is inseparable from stronger governance and risk management. According to him, protecting the credibility of the financial system—both domestically and internationally—requires a culture of compliance, transparency and accountability.
To that end, the CBN has reaffirmed its commitment to maintaining a transparent and resilient financial system by reinforcing regulatory compliance and strengthening risk-management frameworks across financial institutions.
Recapitalisation journey so far
The recapitalisation exercise, announced on March 28, 2024, officially commenced on April 1, 2024, with a 24-month compliance window ending on March 31, 2026. Under the new framework, commercial banks are required to meet higher minimum capital thresholds based on their licence categories: N500 billion for international banks, N200 billion for national banks and N50 billion for regional banks.
Ahead of the March 31 deadline, Cardoso, in his most recent public update, confirmed that 16 banks had already met their new capital requirements, while 27 others were actively raising funds.
That figure has since improved. Speaking last week at a Nigeria Economic Summit Group (NESG) forum, the Deputy Governor, Economic Policy, Dr. Muhammad Abdullahi, disclosed that not less than 20 banks had now met the new capital thresholds.
Nigeria currently has 44 deposit-taking banks across various licence categories, and the recapitalisation has triggered strategic reassessments across the sector. At least seven banks are reportedly considering scaling down their licences from national to regional banking, reflecting the concentration of their operations and the growing ubiquity of digital banking, which reduces the traditional advantages of a nationwide physical footprint.
In a similar vein, one bank that currently holds an international banking licence indicated over the weekend that it may scale down to a national licence in the short term, while continuing to pursue further recapitalisation to rebuild its capital base and eventually regain international authorisation.
The CBN classifies banks into three broad categories—international, national and regional—based on their financial strength and operational scope. This tiered structure allows banks to align their ambitions with their capital capacity, while ensuring systemic stability.
Capital verification and regulatory scrutiny
Raising funds is only one part of the process. Under the recapitalisation guidelines, banks are required to subject newly raised equity to rigorous capital verification before the allotment of shares can be cleared and funds released for inclusion in their capital base.
The CBN is the final signatory in a tripartite Capital Verification Committee, which also includes the Securities and Exchange Commission (SEC) and the Nigeria Deposit Insurance Corporation (NDIC). The committee is tasked with scrutinising funds raised under the recapitalisation programme to ensure their legitimacy, transparency and compliance with regulatory standards.
This multilayered verification process reflects lessons learned from past recapitalisation cycles, where weak oversight sometimes allowed poorly governed banks to misapply fresh capital through risky lending.
N4.14trn in new capital
With an estimated N4.14 trillion in new capital expected to be raised across the sector, the current recapitalisation exercise is shaping up as one of the most significant financial reforms in Nigeria’s recent history.
In a report titled “Nigeria’s macro headwinds trigger bank recapitalisation,” Deloitte projected that the total funds to be raised by March 31, 2026, would reach N4.14 trillion. The firm noted that the upward review of banks’ capital base—from as low as N50 billion to as high as N500 billion, depending on licence type—was essential to boosting the capital adequacy of Nigeria’s financial industry.
According to Deloitte, Nigerian banks’ capital positions have been significantly strained by macroeconomic challenges, including high inflation and interest rates, currency volatility and persistent foreign-exchange illiquidity.
“The upward revision will ensure that Nigerian banks have the capacity to take on bigger risks and stay afloat amid both domestic and external shocks. It also means increased liquidity position of banks, which will help broaden their loss-bearing capabilities,” the report said.
Governance, risk and breaking the boom-and-bust cycle
Cardoso has been unequivocal that the CBN will not repeat the mistakes of previous recapitalisation efforts. In the past, analysts warned that banks, flush with fresh capital but lacking strong risk controls, often embarked on aggressive and sometimes reckless lending, sowing the seeds of future crises.
Determined to avoid a repeat, the CBN is redesigning its credit-risk framework to ensure that new capital is deployed prudently.
“As recapitalisation progresses, we are redesigning the credit-risk framework to enforce stronger governance, greater transparency, and firmer accountability across the sector. We are determined to break the boom-and-bust cycle that has accompanied past recapitalisation efforts,” Cardoso said.
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As part of this effort, the CBN’s Credit Risk Management System (CRMS) has been web-enabled, allowing banks and other stakeholders to directly access the database to submit statutory returns or conduct borrower status enquiries. The apex bank is also integrating the CRMS with internal bank systems to improve efficiency and oversight.
In addition, the CBN has established a fully operational Compliance Department with a broad mandate covering financial crime supervision, market conduct, enterprise security, corporate governance, and Environmental, Social and Governance (ESG) standards.
According to Cardoso, these reforms are designed to ensure that raised funds are protected and that banks operate within a robust framework of controls and accountability.
While insisting that Nigeria’s banking system remains fundamentally sound, the CBN has also highlighted the need for vigilance against emerging risks. “At the same time, we remain vigilant to emerging risks, including cyber threats, credit-concentration pressures, and operational vulnerabilities. These are being addressed through strengthened risk-based supervision and our ongoing transition to Basel III, which will further bolster resilience, improve capital quality, and strengthen liquidity monitoring,” Cardoso said.
With just months to the conclusion of the recapitalisation window, the governor maintained that the process remains firmly on track.
“As we strengthen the capacity of our banks, stress-testing this year confirms that Nigeria’s banking sector remains fundamentally robust. Key financial soundness indicators overwhelmingly satisfied prudential benchmarks during the year,” he added.
Operational discipline and confidence restoration
Beyond capital and risk management, the CBN has also turned its attention to operational discipline, particularly in the cash management ecosystem—an area that has drawn public scrutiny in recent years.
“Our starting point was a comprehensive, end-to-end review of the entire cash lifecycle: from production, to transportation, to distribution, and eventual access by consumers. This holistic assessment enabled us to address root causes rather than symptoms,” Cardoso explained.
The review led to a series of reforms, including recalibration of cash-printing models, guidelines on optimal ATM-to-card ratios, stricter requirements for CBN approval before ATM or branch closures, sanctions on banks whose ATMs fail to dispense cash, and intensified supervision of payment agents and POS operators nationwide.
Ethics, professionalism and market conduct
Addressing bankers recently, Cardoso stressed that the ethics and professionalism of bankers and treasurers are under constant scrutiny, especially in volatile markets.
To strengthen discipline in the foreign-exchange market, the CBN introduced the FX Global Code for all authorised dealers and market participants, insisting on full compliance with regulatory standards.
He also urged the Chartered Institute of Bankers of Nigeria (CIBN) to take the lead in upholding the highest professional standards.
“At the Central Bank, we have intensified surveillance of market activities to ensure compliance and eliminate bad actors who attempt to undermine the system. Together, we must build a market based on strong governance and transparency. As regulators, we will maintain a zero-tolerance approach to compliance violations,” he said.
Industry backing for recapitalisation
Industry leaders have largely welcomed the recapitalisation policy. The Group Managing Director of United Bank for Africa (UBA), Mr. Oliver Alawuba, described the initiative as both timely and essential.
According to him, the policy is critical to positioning Nigeria’s financial system to meet the demands of a growing and globally competitive economy. He noted that stronger capital buffers would enhance banks’ ability to withstand shocks arising from inflation, currency volatility and global geopolitical disruptions.
Alawuba said the recapitalisation goes beyond regulatory compliance, describing it as a forward-looking strategy designed to equip Nigerian banks to operate at the scale and sophistication required by a trillion-dollar economy.
“Nigerian banks need adequate capital buffers to meet the evolving demands of these sectors. Without this, the industry cannot effectively rise to the challenge,” he said.
He added that stronger banks would be better positioned to finance large-scale infrastructure and industrial projects, as well as support traditional sectors such as oil and gas, agriculture and manufacturing, alongside emerging areas like fintech, green energy and infrastructure development.
Banking sector indicators remain strong
Despite macroeconomic headwinds, Cardoso has repeatedly emphasised that key indicators point to a resilient banking system.
“The non-performing loan ratio remains within the prudential benchmark of five per cent, showcasing strong credit risk management. The banking sector liquidity ratio comfortably exceeds the regulatory floor of 30 per cent, a level which ensures banks are maintaining adequate cash flow to meet the needs of customers and their operations. The recent stress test conducted also reaffirmed the continued strength of our banking system,” he said.
He noted that efforts to strengthen banks’ capital buffers were first announced in 2023, with a two-year implementation window deliberately designed to give institutions sufficient time to adjust.
“I am pleased to note that a significant number of banks have raised the required capital through rights issues and public offerings well ahead of the 2026 deadline. I believe that the banking sector is in a strong position to support Nigeria’s economic recovery by enabling access to credit for MSMEs and supporting investment in critical sectors of our economy,” Cardoso added.
Building banks for the future
As the recapitalisation programme enters its final stretch, the message from the CBN is clear: the objective is not merely to meet numerical capital thresholds, but to build a banking system that is bigger, stronger, better governed and more resilient.
By combining higher capital requirements with stricter supervision, enhanced risk management, and a renewed emphasis on ethics and professionalism, the apex bank is seeking to fundamentally reset Nigeria’s financial system.
If successful, analysts say the reform could mark a turning point—one in which Nigerian banks are no longer seen as fragile intermediaries vulnerable to every macroeconomic shock, but as robust institutions capable of supporting sustained growth, financing development and competing credibly on the global stage.
