Moody’s See UBA Leads Capital Gap Among Nigerian Banks, Stanbic IBTC with Lowest Shortfall


Moody’s indicates that UBA (United Bank for Africa) has the largest difference or “gap” between its current capital and the amount required to meet the new capital requirements set by Nigerian regulators. On the other hand, Stanbic IBTC, a Nigerian unit of South Africa’s Standard Bank Group, has the smallest shortfall or “gap” between its current capital and the required amount. In other words, UBA needs to raise the most additional capital to comply with the new regulations, while Stanbic IBTC needs to raise the least additional capital.

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Moody’s Investors Service anticipates substantial consolidation within the sector, especially for banks unable to secure the necessary capital. The exclusion of retained earnings from qualifying capital could further complicate recapitalization efforts, the rating agency noted.

Under the new regulations, the Central Bank of Nigeria has raised the threshold for operating an international bank to N500 billion ($359 million) from N50 billion. Banks with operations solely within the country must now maintain a capital base of 200 billion naira, up from N25 billion. Additionally, banks are prohibited from using accumulated earnings or debt to meet the new capital requirements.

Among the 12 listed banks in Nigeria, only Ecobank Nigeria Ltd’s Nigerian subsidiary is exempt from raising additional capital. The remaining banks must either attract new investors or encourage existing shareholders to purchase fresh stock. United Bank for Africa plc faces the largest capital gap of N384 billion, while Stanbic IBTC has the smallest at N90 billion.

Despite requests for comment on their recapitalization strategies, some banks, including Access Holdings Plc and Zenith Bank, remained silent. The central bank has given lenders one month to submit their plans.

The enhanced capital requirements, according to Moody’s, are a positive development for the banking sector. Strengthened balance sheets will enable banks to expand their loan portfolios while absorbing potential credit losses.

This move echoes the central bank’s previous capital requirement hike in 2004, which triggered a wave of mergers, reducing the number of commercial lenders from 89 to 25. Analysts anticipate a similar outcome this time, with smaller banks considering mergers to meet the new capital demands.

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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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