Top Tier Banks Confront N1.5 Trillion Capital Deficit After CBN’s New Base Requirements



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Central Bank of Nigeria Raises Capital Thresholds

The Central Bank of Nigeria (CBN) has announced substantial increases in minimum capital requirements for banks, causing concern among top-tier banks falling short of compliance.

New Capital Standards Unveiled

In the recent announcement, the CBN raised the minimum capital base for banks with international authorization to N500 billion, a significant surge from the previous N50 billion. Similarly, national and regional authorization now necessitates N200 billion and N50 billion, respectively.

Compliance Deadline Set

Banks are granted 24 months from April 1, 2024, to bolster their capital reserves to meet the new regulations, aiming to fortify their resilience and support Nigeria’s economic growth.

Strategies for Compliance

The CBN outlined strategies for meeting the new capital requirements, including private placements, rights issues, mergers and acquisitions (M&As), and license authorization adjustments.

Capital Composition Clarified

The minimum capital shall comprise paid-up capital and share premium only, with Additional Tier 1 (AT1) Capital ineligible for meeting the new requirement. Banks failing to meet the Capital Adequacy Ratio (CAR) will need to inject fresh capital.

Impact on New Licenses and Implementation Plans

New capital requirements apply to banking license applications submitted after April 1, 2024, with pending applications required to bridge the gap by March 31, 2026. Banks must submit detailed implementation plans by April 30, 2024.

Shortfall Analysis

Top five banks, including Access Bank, FirstBank, GTBank, UBA, and Zenith Bank, collectively face a significant shortfall of N1.5 trillion, highlighting challenges and potential mergers and acquisitions in the banking sector.

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Godwin Okafor
Godwin Okafor
Godwin Okafor is a veteran Financial Journalist, Internet Social Entrepreneur, and the visionary Founder of Naija247news Media Limited. With an extensive career spanning over 16 years in financial journalism, Godwin possesses a wealth of experience that seamlessly bridges both traditional and digital media landscapes. His journey in journalism commenced at Business Day, Nigeria, where he laid the foundation for his prolific career. In 2010, Godwin took a bold step by founding Naija247news Media, a platform that has since become a prominent player in delivering timely and accurate news. Educationally, Godwin Okafor holds a Bachelor's degree in Industrial Relations and Personnel Management from the prestigious Lagos State University, Ojo, Lagos. His commitment to continuous learning led him to the Lagos Business School, where he further honed his skills. Additionally, he is recognized as a Fellow of the University of Pennsylvania, having successfully completed the Wharton Seminar for Business Journalists. Throughout his illustrious career, Godwin has earned acclaim by winning numerous journalism awards, a testament to his dedication to excellence in reporting. Beyond his role as a Financial Journalist, Godwin Okafor wears the hat of the Chairman at Emmerich Resources Limited, the publishing entity behind Naija247news. His visionary leadership has played a pivotal role in shaping the media landscape and establishing Naija247news as a trusted source of information. Godwin Okafor's multifaceted expertise, commitment to journalistic integrity, and leadership in the realm of business journalism underscore his influential presence in both the media and entrepreneurial spheres.

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