Nigeria's New Banking Capital Requirement: A Cause to Worry?
Gideon Asare
Lead Research Analyst at Agpaytech Ltd - UK: Researching on emerging technologies, digital banking, FinTech, payment systems, regulations, remittance, etc.) & Scientific Research.
?? On 28th March 2024, the Central Bank of Nigeria (#CBN ) in a circular announced a review of the minimum capital required for all #Commercial , #Merchant and #Non -Interest Banks.
? This regulatory revision is in line with the $ 1 trillion economy 2030 agenda as well as tackles the #macroeconomic challenges posed by external and domestic shocks.
? This has put both #banks , #customers and other stakeholders in dismay.
But this is not the first the CBN has made such a pronouncement. On the 6th of July 2004, the #Governor of CBN made statements on Nigerian banking sector reforms.
?? At that time a minimum capital base of N25 billion was required. It resulted in the compression of 74 banks, which accounted for about 93% of the industry’s total deposit liabilities into 25 new banks. This led to over $3bn capital inflow and $500m #FDI into the banking sector.
?? Currently, #commercialbanks operating at the #international level require N500 bn ($380m), #national level N200 bn (#150m ) and #regional level needs N50 bn ($38m).
?? #Merchantbanks operating at the national level new capital base is N50 bn ($38m).
?? Also, #noninterest banks must cough out N20 bn ($15.4m) and N10 bn ($7.7m) for authorization at national and regional levels, respectively.?
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?? How do banks meet the new capital requirements?
They have 3 options within 2 years, from 1st April 2024 to 31st March 2026.
? Issuance of new common shares
? Mergers and Acquisitions
? Upgrade/downgrade of license or authorization
? All banks are supposed to submit a clear implementation plan and option for meeting the new requirement by 30th April 2024.
? Now is the survival of the fitters, and where are the investors?
? Do banks have to worry?
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