*As CBN adopt measured approach toward Union Bank of Nigeria, Keystone Bank, Polaris Bank
By Abiodun Folarin
High expectations surround Nigeria’s banking industry as the March 31 recapitalisation deadline closes, with 32 deposit money banks already meeting the new capital thresholds an outcome that underscores strong compliance and improved sector resilience. Attention now shifts to the few institutions yet to meet the benchmark, as their next steps will be determined by the Central Bank of Nigeria (CBN).
The apex bank has, however, adopted a measured approach toward Union Bank of Nigeria, Keystone Bank, and Polaris Bank, reflecting ongoing regulatory interventions aimed at stabilising the affected institutions and safeguarding financial system stability.
The recapitalisation exercise stems from the CBN’s March 2024 circular reviewing minimum capital requirements across banking categories. Under the new framework, commercial banks with international authorisation are required to maintain a minimum capital base of N500 billion, while those with national and regional licences must meet N200 billion and N50 billion thresholds respectively. Merchant banks are to hold N50 billion, while non-interest banks are required to maintain N20 billion for national licences and N10 billion for regional operations. The 24-month compliance window formally ends on March 31, 2026.
Out of the 36 deposit money banks operating in the country, the CBN Governor, Olayemi Cardoso, confirmed at the conclusion of the Monetary Policy Committee (MPC) meeting that 32 institutions had successfully met the revised capital requirements ahead of the deadline.
According to him, “The banking sector recapitalisation programme has recorded commendable progress, with 32 banks having already met the revised capital requirements. This achievement has significantly strengthened the resilience and capacity of the Nigerian banking system, positioning it to effectively mobilise long-term capital, support productive investment, and play its critical role in enabling the transition towards a $1 trillion economy.”
Banks that have met the recapitalisation threshold include Access Bank, United Bank for Africa (UBA), Fidelity Bank, First Bank, Zenith Bank, Guaranty Trust Holding Company (GTCO), Wema Bank, Citibank, Standard Chartered Bank, Ecobank Nigeria, Globus Bank, Sterling Bank, First City Monument Bank (FCMB), SunTrust Bank Nigeria, Titan Trust Bank, Optimus Bank, Stanbic IBTC, PremiumTrust Bank, Providus Bank, among others.
As earlier outlined by the CBN, Nigeria’s banking landscape comprises institutions across different licence categories. Banks with international authorisation include Zenith Bank, Access Bank, First Bank, FCMB, UBA, Fidelity Bank, and GTBank. Those with national licences include Citibank, Ecobank, Globus Bank, Keystone Bank, Polaris Bank, Stanbic IBTC, Standard Chartered Bank, Sterling Bank, Titan Trust Bank, Union Bank, Unity Bank, Wema Bank, PremiumTrust Bank, and Optimus Bank.
The non-interest banking segment comprises Jaiz Bank, Taj Bank, Lotus Bank, and Alternative Bank.
Overall, the strong compliance level signals renewed investor confidence and positions the banking sector to play a more robust role in driving economic growth and financial intermediation in the years ahead.
Experts Applaud Gains, Highlight Real Sector Disconnect
Meanwhile, economic experts have commended the successful and orderly execution of the recapitalisation exercise, while cautioning that stronger bank balance sheets must translate into improved support for the real economy.
Executive Director of the Centre for the Promotion of Private Enterprise (CPPE), Muda Yusuf, described the exercise as a significant milestone in strengthening the banking system’s resilience, stability and capacity.
According to him, the recapitalisation process has been notably non-disruptive, with no reports of depositor losses, forced mergers, job losses or erosion of shareholder value—marking a clear improvement over previous consolidation cycles and reflecting stronger regulatory oversight and market discipline.
However, he stressed that despite the gains, a critical gap remains between the financial system and the productive sectors of the economy.
Private sector credit as a percentage of GDP in Nigeria stands at about 17 percent as of 2025, significantly below the sub-Saharan African average of 25 percent and about 34 percent for lower-middle-income countries. Comparatively, countries such as South Africa (57.5 percent), Mauritius (69.8 percent) and Cape Verde (66.3 percent) demonstrate much stronger financial intermediation.
“This gap underscores a persistent structural disconnect between the financial system and productive sectors of the economy,” Yusuf noted.
Credit Constraints Persist Across Key Segments
Further analysis reveals deeper challenges in credit distribution across critical segments of the economy. Consumer credit remains low at about 7 percent of total credit, compared to 15–25 percent across sub-Saharan Africa, limiting domestic demand and broader economic expansion.
More concerning is the weak flow of credit to small and medium enterprises (SMEs), which accounts for only about 1 percent of total credit, far below the regional average of 5 percent. This is despite SMEs contributing roughly 50 percent of Nigeria’s GDP and over 80 percent of employment, with an estimated financing gap of about ₦48 trillion.
The data highlights one of the most significant structural weaknesses in Nigeria’s financial architecture—raising questions about how effectively the newly strengthened banking system will support inclusive growth.
OutlookWhile the recapitalisation exercise has clearly enhanced the strength and stability of Nigeria’s banking sector, analysts say the next phase must focus on deepening financial intermediation, expanding credit access and ensuring that the gains translate into tangible economic growth.
