Bank recapitalisation boosts government’s drive toward $1 trillion economy
The countdown is on for Nigeria’s ongoing bank recapitalisation, aimed at creating larger, stronger, and more resilient banks. The exercise, led by the Central Bank of Nigeria (CBN), is set
The countdown is on for Nigeria’s ongoing bank recapitalisation, aimed at creating larger, stronger, and more resilient banks. The exercise, led by the Central Bank of Nigeria (CBN), is set to conclude by March 31. Widely regarded as one of the apex bank’s most ambitious initiatives under its current leadership, the programme is expected to accelerate the Federal Government’s $1 trillion economy goal. With N4.05 trillion already raised by 20 banks and over N2 trillion anticipated from another 13 lenders, the recapitalisation promises to deliver significant benefits for businesses and the wider economy, reports Assistant Editor COLLINS NWEZE
Bank recapitalisation remains serious business anywhere in the world. The ongoing exercise is expected to attract no fewer than N6 trillion by the end of this month. The benefits of a successful programme will endure for decades. One of its most significant outcomes will be the emergence of stronger, bigger banks better positioned to undertake large-ticket transactions in support of businesses and the broader economy.
The Central Bank of Nigeria under the leadership of its Governor, Olayemi Cardoso, believes that achieving sustainable economic growth requires solid backing from the financial system. The sector’s regulator is therefore focused on aligning monetary and fiscal policies to realise the government’s growth agenda and its ambition of building a $1 trillion economy. For the apex bank chief, fostering a strong culture of compliance and strengthening risk management frameworks remain central to the CBN’s leadership objective of safeguarding Nigeria’s financial sector while preserving its resilience and credibility at home and abroad. To achieve these goals, the apex bank has reaffirmed its commitment to maintaining a transparent and resilient financial system by reinforcing regulatory compliance and tightening risk management standards across Nigerian financial institutions.
Milestones assessment for recapitalisation
Ahead of the March 31 deadline, Cardoso, in his last public update on the recapitalisation programme, confirmed that 20 banks have met their new capital requirements. He also indicated that other banks were still raising funds. Under the recapitalisation guidelines, beyond raising funds, banks are required to subject their new equity to capital verification before the clearance of the allotment proposal and release of funds for the completion of the offer process and addition of the new capital to the bank’s base.
The Central Bank of Nigeria is the final signatory in a tripartite capital verification committee that includes the Securities and Exchange Commission (SEC) and the Nigeria Deposit Insurance Corporation (NDIC). The committee scrutinises new funds raised by banks under the ongoing recapitalisation programme. Continuing, Cardoso said, “Nigeria’s banking system remains fundamentally sound and resilient, a cornerstone of our financial stability. At the same time, we remain vigilant to emerging risks, including cyber threats, credit-concentration pressures, and operational vulnerabilities. These are being addressed through strengthened risk-based supervision and our ongoing transition to Basel III, which will further bolster resilience, improve capital quality, and strengthen liquidity monitoring,” he said.
The CBN boss disclosed that with just four months to the conclusion of the recapitalisation exercise, the process remains firmly on track. “As we strengthen the capacity of our banks, stress-testing this year confirms that Nigeria’s banking sector remains fundamentally robust. Key financial soundness indicators overwhelmingly satisfied prudential benchmarks during the year,” Cardoso added.
He said the apex bank is reinforcing operational discipline to ensure the financial system serves all Nigerians reliably. “Our starting point was a comprehensive, end‑to‑end review of the entire cash lifecycle: from production, to transportation, to distribution, and eventual access by consumers. This holistic assessment enabled us to address root causes rather than symptoms.
“As a result, we recalibrated our cash‑printing models, issued guidelines on the optimal ATM‑to‑card ratio, strengthened requirements for CBN approval before ATM or branch closures, enforced sanctions on banks whose ATMs fail to dispense cash, and intensified supervision of payment agents and POS operators nationwide,” he said.
Speaking recently to bankers, Cardoso said the ethics and professionalism of bankers and treasurers are under constant scrutiny. According to him, the apex bank introduced the FX Global Code for all authorised dealers and market participants to ensure full compliance with regulations. He urged the Chartered Institute of Bankers of Nigeria (CIBN) to take the lead in upholding and demonstrating the highest standards in the industry.
“At the Central Bank, we have intensified surveillance of market activities to ensure compliance and eliminate bad actors who attempt to undermine the system. Together, we must build a market based on strong governance and transparency. As regulators, we will maintain a zero-tolerance approach to compliance violations,” he said.
Matthew Verghis, Country Director of the World Bank in Nigeria, underscored the importance of positioning recapitalisation as a tool for economic transformation. “A stronger banking system creates the foundation to finance Nigeria’s long-term ambitions — from empowering MSMEs and expanding productive capacity to unlocking large-scale infrastructure development. The opportunity before us is clear: to convert stronger balance sheets into deeper intermediation, greater resilience, and inclusive growth that accelerates Nigeria’s journey toward a more competitive and sustainable economy,” he said.
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Head of Financial Institutions Ratings at Agusto & Co, Ayokunle Olubunmi, said many banks classified as being at an advanced stage of compliance have already secured the required funds. “You’ll be shocked that a lot of those that the CBN said are at an advanced stage, some of them already have the funds with the CBN. What CBN is doing is verifying those funds. So, it’s not that they are still going in the markets looking for the funds. The bulk of them have actually raised the funds.”
The Group Managing Director of United Bank for Africa (UBA), Oliver Alawuba, described the ongoing CBN recapitalisation policy as timely and essential in positioning the financial system to meet the demands of a growing, globally competitive economy. According to Alawuba, the initiative is expected to boost banking sector resilience by strengthening its capacity to withstand economic shocks such as inflation, currency volatility, and global geopolitical disruptions. He noted that the policy would place Nigerian banks on a stronger footing to finance long-term economic transformation, including large-scale infrastructure and industrial projects. He further stressed that the recapitalisation policy goes beyond regulatory compliance. It is a forward-looking strategy aimed at equipping Nigerian banks to operate at the scale and sophistication required by a trillion-dollar economy. “Nigerian banks need adequate capital buffers to meet the evolving demands of these sectors. Without this, the industry cannot effectively rise to the challenge,” he said.
Building resilient banking system
Cardoso earlier explained that within the banking sector, the sector remains robust with key indicators reflecting a resilient system. “The non-performing loan ratio remains within the prudential benchmark of five per cent, showcasing strong credit risk management. The banking sector liquidity ratio comfortably exceeds the regulatory floor of 30 per cent, a level which ensures banks are maintaining adequate cash flow to meet the needs of customers and their operations. The recent stress test conducted also reaffirmed the continued strength of our banking system,” he said.
To ensure that our banking system can effectively support the growth of our economy, efforts to strengthen banks’ capital buffers were announced in 2023 with a two-year implementation window. “I am pleased to note that a significant number of banks have raised the required capital through right issues and public offerings well ahead of the 2026 deadline! I believe that the banking sector is in a strong position to support Nigeria’s economic recovery by enabling access to credit for MSMEs and supporting investment in critical sectors of our economy,” he said.
Cardoso explained that the banking sector remains robust, with key indicators reflecting a resilient system. “The non-performing loan ratio remains within the prudential benchmark of five per cent, showcasing strong credit risk management. The banking sector liquidity ratio comfortably exceeds the regulatory floor of 30 per cent, a level which ensures banks are maintaining adequate cash flow to meet the needs of customers and their operations. The recent stress test conducted also reaffirmed the continued strength of our banking system,” he said.
“I am pleased to note that a significant number of banks have raised the required capital through rights issues and public offerings well ahead of the 2026 deadline. I believe that the banking sector is in a strong position to support Nigeria’s economic recovery by enabling access to credit for MSMES and supporting investment in critical sectors of our economy,” he said.
Major policy shifts lifting economy
Founder and Chief Consultant of B. Adedipe Associates Limited (BAA Consult), Prof. ‘Abiodun Adedipe, listed major policy shifts yielding positive results for the economy. He said that the CBN has eliminated strange arbitraging and round tripping opportunity through the forex market reforms; through petrol subsidy removal, the Federal Government Remove crippling annual waste of US$10.7 billion and created environment for competition; bank recapitalisation is creating stronger and more capable banks to fund US$1 trillion economy while fiscal consolidation is plugging leakages, deploying technology and making government agencies more accountable and expanding fiscal space at sub-national.
Continuing, Adedipe said the real game changer remains the tax reforms, capable of igniting regional competition (the secret behind Chinese economic renaissance) while the Nigerian Education Loan Fund, Consumer Credit Corporation, Recapitalized Bank of Agriculture, National Credit Guarantee Company Ltd, Single digit interest rate mortgage loans are major steps that should be taken to support sustainable economic growth.
Adedipe said that Nigeria’s economy is supported by large, youthful and rapidly growing population (estimated at 237.53 million in July 2025 and sixth largest in the world, median age at 18.1 years). The country, he said, also benefits from rapid urbanisation with 54.28 per cent in December 2023, up from 46.12 per cent in 2013 and 51.96 per cent in 2020, deepening internet penetration which is at 48.15% in April 2025, up from 45.57 per cent in August 2023 and 31.48 per cent in December 2018.
The CBN explained that monetary reform cannot be effective in a vacuum. Alignment with fiscal policy has strengthened Nigeria’s macro stability and yielded tangible results including reduced domestic borrowing costs, improved liquidity conditions, and more predictable fiscal operations. For instance, the discontinuation of direct deficit financing signals one prong in our commitment to discipline.
