8 Days To Go: 33 Banks Beat CBN Recapitalisation Deadline With N6.5trn Capital Base

With just about eight days to the deadline given to banks in the country to shore up their capital base, nearly all banks, with the exception of the legacy banks, have crossed the finishing line, with their combined capital base surpassing N6.5 trillion or $4.7 billion.

Of the 37 banks with operating licences, ranging from international to national, and from merchant to non-interest banking, 33 say they have met the required capital base for their respective licences, while two are already at the concluding stage of their merger plans.

This leaves three banks that are under regulatory intervention in the race.

The CBN had directed commercial banks with international authorisation to hold a minimum of N500 billion in paid-up capital, up from N50 billion previously held. National banks are required to have a N200 billion capital base compared to N25 billion, while regional banks must have N50 billion, up from N10 billion.

Merchant banks are also required to shore up their capital base to N50 billion, up from N15 billion. Non-interest banks with national licences must now raise theirs to a N20 billion capital base, up from N10 billion, while regional non-interest banks are required to have a capital base of N10 billion, up from N5 billion.

Based on information provided by the banks, there are seven banks with international licences, 10 banks with national licences, five merchant banks, six regional banks, four national non-interest banks and one regional non-interest bank.

In total, these banks have a combined capital base of N6.519 trillion, or $4.7 billion, using an exchange rate of N1,360 to the dollar. All these funds were raised through public offers, rights issues, private placements, as well as divestments.

According to the Governor of the Central Bank of Nigeria, Olayemi Cardoso, over 28 per cent of the funds raised came from foreign investors, while over 71 per cent came from domestic sources, underscoring increasing investor engagement and confidence in the Nigerian banking industry, both at home and abroad.

On the list of banks with international licences are Zenith Bank, with a capital base of N614.65 billion; United Bank for Africa, with N513 billion; and Access Bank, whose capital base now exceeds N600 billion.

Also on the international banks’ list are Guaranty Trust Bank, with N504 billion; Fidelity Bank, with N507 billion; First City Monument Bank, with N509 billion; and First Bank, which now has a capital base in excess of N500 billion.

On the national banking licence list are Ecobank Nigeria, Premium Trust Bank, Stanbic IBTC, Wema Bank, Citibank, Standard Chartered Bank, Globus Bank, Sterling Bank, Optimus Bank, and the newly merged Providus-Unity Bank, all of which now have capital bases in excess of N200 billion.

Based on their current capital base of N50 billion, Nova Bank, Parallex Bank, Alpha Morgan Bank, SunTrust Bank, Signature Bank and Titan Bank are the six regional banks, while Rand Merchant Bank, Greenwich Merchant Bank, Coronation Merchant Bank, Quest Merchant Bank and FSDH have capitalised up to N50 billion to meet the merchant banking licence requirement.

Jaiz Bank is leading the national non-interest banking segment, exceeding the required N20 billion capital with a base of N47.9 billion. Other non-interest banks with national licences that have met the required capital are Lotus Bank, Taj Bank and The Alternative Bank. Summit Bank also qualifies as a regional non-interest bank, with a capital base of N15.3 billion, exceeding the required N10 billion for its category.

The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, had earlier revealed that the capital base of 30 banks had been verified, while the capital positions of the remaining banks are undergoing the Central Bank’s routine verification process ahead of final confirmation of compliance within the recapitalisation timeline.

This leaves Union Bank, Keystone Bank and Polaris Bank in the race, all of which are undergoing regulatory intervention.

However, a source in Union Bank said the bank is working towards crossing the line before the deadline and would be making announcements soon.

Meanwhile, the CBN governor has hinted that there might be an extension for banks undergoing regulatory intervention. According to him, the affected banks do not have as much leverage as others to meet the required capital.

“For institutions currently undergoing regulatory intervention, there are certain legal and structural considerations which naturally influence the sequencing of their recapitalisation actions. It is unreasonable to expect that they would follow the same sequence as those that have had ample time  – about two and a half years since the announcement – to prepare,” Cardoso stated.