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HomeNewsNigerian Banks Ordered To Recapitalise Between N10bn And N500bn

Nigerian Banks Ordered To Recapitalise Between N10bn And N500bn

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The Central Bank of Nigeria (CBN) has announced new guidelines on its recapitalisation policy for banks in the country in a belt that ranges between N10 billion and N500 billion.

The proposed increase in the capital base comes nearly two decades after the CBN’s 2004 banking reform, which increased the then-prevailing capital base from N2 billion to N25 billion.

The new guidelines were disclosed in a statement signed by its Acting Director, Corporate Communications, Ms. Sidi Ali, in Abuja on Thursday.

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According to her, all banks would need to increase their capital base.

  • Banks with international authorisation: N500 billion
  • Banks with national authorisation: N200 billion
  • Banks with regional authorisation: N50 billion
  • Merchant Banks: N50 billion
  • Non-Interest Banks(National): N20 billion
  • Non-interest (Regional): N10 billion

The CBN’s move came two days after the Monetary Policy Committee hinted that it would change the capital base of the nation’s banks.

At the press briefing that followed the 294th MPC meeting on Tuesday, the CBN Governor, Olayemi Cardoso, urged DMBs to expedite actions to increase their capital base to strengthen the financial system against potential risk.

In its meeting, the committee noted that to guard against risk, commercial banks in the country should accelerate their recapitalisation efforts.

Cardoso said, “The MPC also reviewed developments in the banking system and noted that the industry remains safe, sound, and stable. The committee thus called on the bank to sustain its surveillance and ensure compliance of banks with existing regulatory and macro-potential guidelines.

“The MPC also enjoined the banks to expedite actions on  recapitalisation to strengthen the system against potential risks in an increasingly globalised world.”

The current capital base is stratified based on the type of banking licence – banks with regional, national, and international licences are currently expected to maintain the minimum capital bases.

The 2004 banking reform was characterised by massive mergers and acquisition activities, ultimately reducing the number of banks in the country from 89 to 25.

Last year, Deposit Money Banks’ chief executive officers and other top executives had begun moves to raise fresh capital to bolster their respective institutions’ capital base through preliminary merger and acquisition talks.

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