The Central Bank of Nigeria (CBN) may raise Nigerian commercial banks’ minimum capitalisation to N906 billion.
A report ‘Banking Sector FY 2024 Outlook’ released by CardinalStone Securities, noted: “Banks may be expected to boost capital base to between N181.85 billion (for regional banks) and N909.27 billion (for international banks), given 2024 real GDP of $472.6 billion and exchange rate of N841.61/$ as of December 20, 2023.”
The projection came after CBN governor, Olayemi Cardoso, said the apex bank would ask lenders to raise more capital to support the federal government’s vision to grow the economy to $1 trillion.
A similar step was taken in July 2004 when the governor of the apex bank then, Chukwuma Soludo, ordered banks to increase their minimum shareholder capital from N2 billion ($15m) to N25 billion, a move that was designed to cull the country’s numerous weak, under-capitalised banks.
The policy action triggered the formation of a competitive banking sector that could contribute more effectively to Nigeria’s economic development.
At the time, just two banks out of 89 licensed institutions had capital bases of more than N25 billion. The banks were the Union Bank and First Bank of Nigeria.
To an investment banker, Tolulope Alayande, the rate of devaluation of the naira and the general inflation coupled with the aspiration of the Bola Tinubu’s administration to raise Nigeria’s economy to a $1 trillion made the plan timely.
“I think that the recapitalisation of the banks is overdue. With the downward slide of the naira and the general inflation and of course, the aspiration of the current administration to take the economy to $1 trillion calls for a strong financial institution. The banks should be able to support such a lofty aspiration,” he said.
