Nigeria’s Deposit Money Banks are ramping up efforts to strengthen their capital base as the Central Bank of Nigeria (CBN) intensifies regulatory oversight aimed at deepening governance, transparency, and risk management across the financial system.
While the banking sector remains stable and resilient, one of the strongest pillars of Nigeria’s financial architecture CBN Governor Olayemi Cardoso has said the apex bank is maintaining heightened vigilance against emerging risks, including cyber threats, credit concentration, and operational weaknesses. These risks, he noted, are being addressed through stronger risk-based supervision and Nigeria’s transition to Basel III standards, which are expected to improve capital quality, enhance liquidity monitoring, and reinforce system-wide resilience as recapitalisation advances.
A defining phase for Nigerian banks
Nigeria’s banks are navigating one of the most consequential periods in their history. Members of the Monetary Policy Committee (MPC) have consistently affirmed that the system remains safe and sound. At its 303rd meeting in Abuja, the MPC expressed confidence in the sector’s health, noting that most financial soundness indicators remain within regulatory thresholds.
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The committee also acknowledged significant progress in the recapitalisation programme, revealing that 16 banks have already met the revised capital requirements. With fewer than four months to the deadline, the CBN has reiterated that the process is firmly on track.
Speaking at the recent Bankers’ Dinner in Lagos, Cardoso said several banks have completed the exercise, while others are making steady progress toward the March 31, 2026 deadline.
“To date, 27 banks have raised capital through public offers and rights issues, and sixteen have already met or exceeded the new requirements,” he said. “This reflects the depth, resilience, and capacity of Nigeria’s banking sector.”
He added that stress tests conducted this year confirmed the system’s robustness, with key financial soundness indicators comfortably meeting prudential benchmarks.
Strengthening the credit-risk framework
Beyond recapitalisation, the CBN is redesigning the sector’s credit-risk framework to protect an estimated ₦4.14 trillion in fresh capital expected to be raised before the programme concludes. Cardoso said the apex bank is enforcing stricter governance, transparency, and accountability to prevent a repeat of past boom-and-bust cycles.
To support this effort, the CBN has established a fully operational Compliance Department with oversight responsibilities covering financial crime supervision, market conduct, enterprise security, corporate governance, and environmental, social, and governance (ESG) issues.
“As recapitalisation progresses, we are redesigning the credit-risk framework to enforce stronger governance and firmer accountability across the sector,” Cardoso said. “We are determined to break the cycle that accompanied previous recapitalisation exercises.”
The CBN has also upgraded its Credit Risk Management System, making it web-enabled and integrating it with banks’ internal platforms to improve efficiency in borrower checks and statutory reporting.
Why recapitalisation matters
A Deloitte report titled Nigeria’s macro headwinds trigger bank recapitalisation estimates that banks will collectively raise about ₦4.14 trillion before March 2026. The report notes that the sharp increase in minimum capital from ₦50 billion to ₦500 billion depending on licence type is necessary to strengthen banks against inflation, high interest rates, currency volatility, and foreign exchange constraints.
According to the report, higher capital buffers will enable banks to absorb larger shocks, take on bigger risks responsibly, and improve liquidity positions, ultimately enhancing their loss-bearing capacity.
Cardoso reaffirmed that the system remains sound, with non-performing loans within the prudential five per cent benchmark and liquidity ratios well above the 30 per cent minimum. He added that the Basel III transition will further fortify the sector against future shocks.
Operational discipline and cash management
The CBN is also tightening operational discipline to ensure the financial system functions efficiently for consumers. Cardoso disclosed that the apex bank conducted a comprehensive review of the entire cash lifecycle from production and transportation to distribution and access.
This review informed measures such as recalibrating cash-printing models, issuing ATM-to-card ratio guidelines, strengthening approvals for ATM and branch closures, sanctioning banks whose ATMs fail to dispense cash, and enhancing nationwide supervision of point-of-sale operators.
Banking sector and Nigeria’s $1 trillion ambition
These regulatory reforms align with the Federal Government’s ambition of building a $1 trillion economy by 2030. Cardoso stressed that a well-capitalised banking system is critical to financing the scale of economic activity required to achieve that goal.
“Will Nigerian banks have sufficient capital to service a $1 trillion economy in the near future? In my opinion, the answer is no unless we take action,” he said, noting that recapitalisation will enable banks to support larger transactions and long-term growth.
CBN Deputy Governor for Corporate Services, Emem Usoro, echoed this view, describing recapitalisation as a key pillar of Nigeria’s growth strategy. “As we work toward a $1 trillion economy, banks must be adequately capitalised to fund and power that expansion,” she said.
Industry leaders agree. United Bank for Africa Group Managing Director, Oliver Alawuba, described the exercise as timely, saying it would help banks withstand inflation, currency instability, and global geopolitical shocks while positioning them to finance large infrastructure and industrial projects.
The legal and policy foundation
Under the Central Bank of Nigeria Act of 2007, the apex bank is mandated to promote financial system stability. Analysts note that this role is critical, as bank failures can erode confidence, disrupt savings and investment, weaken the payment system, and damage the real economy.
Through recapitalisation, enhanced supervision, and stronger governance enforcement, the CBN aims to ensure that Nigeria’s banking system remains resilient, credible, and capable of supporting inclusive economic growth in the years ahead.
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