Pressure on Nigeria’s Tier-2 banks is intensifying as the Central Bank of Nigeria’s (CBN) March 2026 recapitalisation deadline approaches.
New research by SBM Intelligence warns that many may be swept up in a fresh wave of mergers and acquisitions.
In 2024, the CBN directed all commercial banks to raise their minimum paid-up capital to N500 billion for international banks, N200 billion for national banks, and N50 billion for regional banks.
According to the latest SBM report, “Capital, Competition, and Consolidation,” the new rules are designed “not merely as a compliance exercise but as a strategic imperative to fortify the sector’s capacity to withstand macroeconomic shocks, support Nigeria’s ambition for a $1 trillion economy, and restore global investor confidence.”
The report noted that Tier-1 banks such as Zenith, Access, and FBN Holdings remain firmly dominant with record profits and strong balance sheets, but mid-tier lenders are now fighting for survival.
“For Tier-2 banks, these developments present both a challenge and an opportunity. While some have made early strides in capital raising, many face the stark reality of needing to scale up rapidly or risk being subsumed in a wave of industry consolidation.
The ability of Tier-2 banks to navigate regulatory headwinds, leverage technology, and execute bold capital strategies will determine their place in the next chapter of Nigeria’s financial evolution.
The sector will likely witness further consolidation, with mergers and strategic alliances among mid-tier banks becoming more prevalent. This will create larger, more competitive institutions, but the risk of marginalising smaller players and potential integration challenges must be carefully managed.”
Already, some banks have made progress. Fidelity Bank raised over N270 billion through a public offer and rights issue that were oversubscribed by 238 per cent and 138 per cent, respectively. With its next phase of capital raising, it is on track to exceed the N500 billion threshold.
SBM noted that FCMB Group had adopted a “comprehensive, phased approach” targeting about N400 billion. The plan, broken into three phases, includes a public offer that raised N144.6 billion in early 2025, asset divestments of subsidiaries such as Credit Direct and FCMB Pensions, and final private placements with offshore investors.
According to the report, Wema Bank has pursued a two-tranche programme combining rights issues and private placements worth N200 billion. In December 2023, it completed a N40 billion rights issue, followed by a N150 billion raise in April 2025. A further N50 billion private placement is expected.
Sterling Financial Holdings, on its part, is seeking $400 million through a mix of private placements and a planned public offering.
Despite these moves, SBM warned that the recapitalisation process is not without risks, saying, “The prospect of such consolidation raises critical questions about the future structure of the sector, the competitive dynamics between banks, and the implications for customers, employees, and the broader economy.”
The report pointed to high funding costs, shrinking non-interest income, and the risk of loan defaults in a high-interest-rate environment, stating, “Many banks face the twin burden of expanding their asset base while keeping non-performing loans below regulatory thresholds.”
