ARTICLE
20 January 2025

Regulatory Update: Increase In The Minimum Share Capital Requirements For Banks

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Tope Adebayo LP

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The Central Bank of Nigeria (CBN) recently unveiled the Banking Sector Recapitalization Programme 2024 (the "Programme") which mandates commercial, merchant, and non-interest banks to increase their minimum paid-in common equity capital before 31st March 2026.
Nigeria Finance and Banking

Introduction

The Central Bank of Nigeria (CBN) recently unveiled the Banking Sector Recapitalization Programme 2024 (the "Programme") which mandates commercial, merchant, and non-interest banks to increase their minimum paid-in common equity capital before 31st March 2026. This marks the first increase since 2004 and aims to enhance the resilience, solvency, and stability of banks with the overarching goal of supporting the achievement of a US$1 trillion Nigerian economy by 2030.

Here, we highlight the new minimum capital requirements for the affected banks, recapitalization options available and key considerations and implications arising from the Programme.

New Minimum Capital Requirements (MCR)

The revised minimum capital requirements for commercial, merchant, and non-interest banks are detailed in the table below.

License Category

Previous Capital Requirement

New Capital Requirement

International Commercial Banks

N50 billion

N500 billion

National Commercial Banks

N25 billion

N200 billion

Regional Commercial Banks

N10 billion

N50 billion

National Merchant Banks

N15 billion

N50 billion

National Non-Interest Banks

N10 billion

N20 billion

Regional Non-Interest Banks

N5 billion

N10 billion

In assessing compliance with the new MCR by prospective banks, CBN will only consider Paid-up capital while for existing banks, the CBN will take into consideration the Paid-in capital (that is Paid-up plus Share Premium) only. As a result, bonus issues, shareholders' fund, other reserves, and Additional Tier 1 (AT1) capital will not be allowed or recognized for the purpose of meeting the new minimum capital requirements. Nonetheless, relevant reserves will continue to be recognized in the computation and determination of the risk-based Capital Adequacy Ratio (CAR) in line with the CBN's Guidelines on Regulatory Capital...

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Originally published by 22 April 2024

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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