CBN Increases Minimum Capital Base For Banks

CBN Increases Minimum Capital Base For Banks

The Central Bank of Nigeria (CBN) has announced new minimum capital requirements for commercial, merchant, and non-interest banks. In a statement released by its Acting Director of Corporate Communications, Hakama Sidi Ali, the CBN specified the following minimum capital bases:…..READ ALSO CBN Governor Clarifies Position On Binance Regulation

• Commercial banks with international authorization: N500 billion
• National authorization commercial banks: N200 billion
• Regional authorization commercial banks: N50 billion
• Non-interest banks with national authorization: N20 billion
• Non-interest banks with regional authorization: N10 billion

The CBN justified the increase in capital requirements due to prevailing macroeconomic challenges and various external and domestic shocks. This directive follows a circular issued to all commercial, merchant, and non-interest banks, as well as promoters of proposed banks.

The circular, signed by the Director of the Financial Policy and Regulation Department, Haruna Mustafa, outlined that banks must meet the new minimum capital requirements within 24 months, starting from April 1, 2024, and ending on March 31, 2026.

CBN Governor Olayemi Cardoso initially disclosed this plan during his address at the Annual Bankers’ Dinner in November 2023. The objective is to enhance banks’ resilience, solvency, and capacity to support the growth of the Nigerian economy.

To comply with the new requirements, banks are encouraged to consider injecting fresh equity capital through various means such as private placements, rights issues, mergers and acquisitions (M&As), or upgrading/downgrading of license authorizations.

The minimum capital requirement comprises paid-up capital and share premium only, excluding the Shareholders’ Fund. For proposed banks, the minimum capital requirement is paid-up capital. The new requirement applies to all new banking license applications submitted after April 1, 2024.

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