Central Bank Clarifies Holding Company’s Paid-up Capital Computing

The Central Bank of Nigeria has issued a fresh directive clarifying how banks and financial holding companies should compute their minimum paid-up capital, ending weeks of regulatory uncertainty that slowed the release of half-year and nine-month results across the industry.

In a circular dated November 14, the apex bank stated that minimum paid-up capital must now be calculated strictly from the par value of issued shares and the share premium arising from their issuance. The directive, which takes immediate effect, supersedes all prior interpretations of Section 7.1 of the 2014 Guidelines for the Licensing and Regulation of Financial Holding Companies.

The bank stated that the move became necessary after observing divergent interpretations among operators, with some excluding the share premium entirely while others added reserves and retained earnings. This led to inconsistent capital positions that triggered delays in regulatory reviews and, in several cases, forced institutions to reconcile their numbers before submitting results for approval.

The circular also placed holding companies in sharper focus, reminding them that their issued share capital must exceed the combined capital of their subsidiaries. Under the updated definition, only issued share capital and share premium will count toward meeting that requirement, a shift that may compel some groups to adjust their capital structures.

The circular read “the Central Bank of Nigeria (CBN) has noted divergent interpretations of the term minimum paid-up capital as referenced in Section 7.1 of the Guidelines for Licensing and Regulation of Financial Holding Companies in Nigeria 2014 (the Guidelines).

“To ensure consistency and strict adherence, this clarification is hereby issued. For the purpose of Section 7.1 of the Guidelines, minimum paid-up capital shall be the aggregate of the par value of issued shares and any share premium arising from their issuance.

“Accordingly, all Financial Holding Companies are required to apply this definition in computing their minimum capital requirement, including those of their subsidiaries, without exception. This directive takes immediate effect, and all previous interpretations that conflict with this position should be discontinued forthwith. Please be guided accordingly.”

The clarification comes as the industry continues to implement the ongoing recapitalisation programme. It reinforces uniform reporting rules at a time when lenders are expected to strengthen their capital bases in line with new thresholds.

Based on the revised computation, leading banking groups maintain strong buffers. First HoldCo’s recognised capital stands at N398.04 billion. UBA follows with N350.08 billion. GTCO records N507.58 billion, while Access Holdings posts N594.90 billion. Zenith Bank holds the largest recognised paid-up capital at N614.65 billion.