27 Banks Yet To Clear Recapitalisation Hurdle

The Central Bank of Nigeria (CBN) revealed on Tuesday that 27 banks are still working to meet the apex bank’s new minimum capital requirement, even as the Monetary Policy Committee (MPC) voted to keep the benchmark interest rate steady at 27 per cent.

This decision was made at the MPC’s 303rd and final meeting of 2025, held from November 24 to 25 in Abuja.

The CBN governor and MPC chairman, Olayemi Cardoso, who gave the update at a post-meeting press briefing in Abuja, announced the conclusions of the MPC’s 303rd and final meeting for 2025.

The recapitalisation policy is billed to take effect by March 31, 2026 fully.

Addressing questions on the state of the recapitalisation programme yesterday, Mr Cardoso stressed that the CBN had consistently worked to build adequate buffers across the financial system, and banks themselves were now strengthening their capacity in line with new regulatory expectations.

He explained, “With the commercial banks, they too are in the process of creating buffers, because this is exactly what comes as a result of the recapitalisation that they are presently going through. Sixteen of them have fully complied. 27 of them have, through various means, raised capital. We are monitoring the developments. And from every indication, it is going in the right trajectory.”

Cardoso noted that the CBN was closely monitoring the developments and expressed optimism that the industry was moving steadily in the right direction.

According to the CBN Governor, the ongoing capital reinforcement is a necessary step toward building a banking system resilient enough to support Nigeria’s long-term growth ambitions. He added that the bank was  determined to ensure that Nigerian banks are fit for purpose, particularly given their expanding footprint across multiple African markets.

With banks operating in various jurisdictions across the continent, Cardoso said that strengthened buffers would help them navigate external risks more effectively, protect depositors, and enhance their ability to support Nigerian businesses and citizens operating abroad.

Twelve members of the MPC meeting, held between November 24 and 25, voted by majority to maintain the Monetary Policy Rate at 27 per cent, while adjusting the asymmetric corridor around the benchmark rate to +50/-450 basis points.

It also retained the Cash Reserve Ratio (CRR) for Deposit Money Banks at 45 per cent, Merchant Banks at 16 per cent, and 75 per cent for non-TSA public sector deposits. The Liquidity Ratio was likewise held at 30 per cent.

Cardoso stated that the MPC’s decision to sustain its current stance was underpinned by the committee’s desire to preserve progress toward achieving low and stable inflation. He noted that headline inflation decelerated year-on-year for the seventh consecutive month in October 2025.

The MPC attributed the favourable trend to a combination of factors, including sustained monetary policy tightening, stable exchange rates, improved food supply, increased capital inflows and a surplus current account balance. The relative stability in the price of Premium Motor Spirit (PMS), he added, further contributed to moderating price pressures during the period.

Despite the positive direction, Cardoso cautioned that inflation remained at double digits, underscoring the need for continuous effort to moderate it further.

However, the committee’s forecast indicates a sustained disinflation in the near term, to be primarily driven by the lagged impact of previous monetary policy tightening measures, supported by

The continued stability in the foreign exchange market. In addition, the ongoing seasonal harvest cycle is expected to boost local food supply, and further moderate food prices.

The MPC reaffirmed its commitment to an evidence-based policy approach towards achieving the Bank’s mandate of price and financial system stability.

Cardoso said the deceleration across headline, core, and food inflation measures in October suggests that the lagged effects of previous policy actions are still being transmitted through the economy. Given persistent global uncertainties, he said the MPC opted to maintain its policy stance to ensure these effects fully manifest and support ongoing disinflation.

The Governor also outlined the committee’s view on Nigeria’s external sector, noting that the country’s surplus current account and steady accretion to external reserves have significantly contributed to stabilising the exchange rate.

The developments, he said, have in turn helped moderate inflation and improve investor confidence. The MPC further commended the increased collaboration between fiscal and monetary authorities, which recently resulted in upgrades of Nigeria’s sovereign credit rating by major international agencies and the delisting of the country from the Financial Action Task Force (FATF) grey list.

Cardoso added that the banking system remains resilient, with financial soundness indicators staying within regulatory thresholds. He said the progress recorded in the recapitalisation programme reflects the industry’s commitment to strengthening its foundation ahead of future economic expansion. The committee, he noted, urged the CBN to ensure the successful completion of the programme to safeguard financial stability and enhance the capacity of banks to support economic growth in the years ahead.

With the combination of stable monetary policy, declining inflation, more substantial reserves and continued reforms in the financial sector, Cardoso said the outlook for the Nigerian economy remains positive. He emphasised that the apex bank will continue to rely on data-driven assessments to guide policy decisions and maintain macroeconomic stability.

Commenting on the committee’s decisions, economic analysts emphasised the rationale behind keeping rates steady amid these mixed developments.

The chief executive of Economic Associates, Dr Ayo Teriba, told LEADERSHIP that though inflation has been subsiding for 11 months, the MPC’s recent narrowing of the asymmetric corridor is a subtle easing. “Adjusting the corridor from +250/-250 to +50/-450 basis points is effectively a softening of about 200 basis points. This makes banks less likely to park their liquid assets with the CBN and more likely to invest in private sector projects,” he explained. Teriba expressed hope for an interest rate cut early in 2026, aligned with ongoing positive macroeconomic indicators like steady inflation decline, stable exchange rates, and GDP growth.

On his part, Ayokunle Olubunmi, Head of Financial Institution Ratings at Agusto & Co.,   interpreted the MPC’s hold on the rate as a sign that the decline in inflation is not yet sufficient to justify a cut. “They might still have liquidity concerns given government borrowing levels and high liquidity in the system, with banks depositing more than N900 billion recently through the Standing Deposit Facility,” he observed. Olubunmi said the committee seeks to incentivize banks to lend rather than park funds with the CBN by recalibrating the corridor and lowering borrowing costs, though “with current market liquidity, banks are not keen to borrow.”

Also speaking, the chief executive of the Center for the Promotion of Private Enterprise, Dr. Muda Yusuf, noted the MPC’s cautious stance is likely to consolidate macroeconomic reforms amid global uncertainties.

“The corridor reduction gives banks some freedom to invest in the economy, which should spur growth,” he said. Still, Yusuf emphasised the need for government structural reforms to drive genuine productivity and economic growth.

The managing director of Arthur Stevens Asset Management, Olatunde Amolegbe, agreed that caution reigns. “The MPC has chosen to observe if the gains from slowing inflation and forex stability are sustainable. The holiday season’s expected consumption uptick and ongoing insecurity impacting food prices may have influenced this conservative approach,” he said. Amolegbe expects little immediate impact on stocks from the decision but foresees typical short-term seasonal market fluctuations.

Regarding Nigeria’s external sector, Cardoso noted that sustained surplus current account balances and reserve accretions have stabilised the exchange rate, boosting inflation control and investor confidence. He praised enhanced fiscal-monetary collaboration that contributed to credit rating upgrades and Nigeria’s removal from the FATF grey list.

The CBN Governor concluded that the banking system remains resilient, with all financial health measures within regulatory thresholds. “The progress in recapitalisation reflects the industry’s commitment to a stronger foundation ahead of future economic expansion. The committee expects the CBN to ensure the programme’s successful completion to safeguard financial stability and enhance banks’ capacity to fuel economic growth,” he said.

With inflation decelerating, stable monetary policy, growing reserves, and sectoral reforms, Cardoso expressed optimism: “The outlook for the Nigerian economy remains positive. We will rely on data-driven policy choices to maintain macroeconomic stability for growth.”