Recapitalisation: Banks head for N6tr closure
The total capital raised under the ongoing banking recapitalisation could rise to about N6 trillion as banks race to close special placements and rights ahead of the month-end deadline. Investment
- Respite for CBN-managed banks
The total capital raised under the ongoing banking recapitalisation could rise to about N6 trillion as banks race to close special placements and rights ahead of the month-end deadline.
Investment banking sources yesterday said banks still have a pipeline of more than N1.5 trillion in pending capital raising deals, with most of these deals expected to crystalise before the curtain drops on the exercise on March 31.
While checks with capital market regulators yesterday indicated there were no pending approvals for public offers, banks were said to relying on shortened route to recapitalisation through private placements to new and existing shareholders, strategic investor, institutional holding and high-networth investors.
Sources said the banks employing ‘close and tender’ approach to finalise their new equity deals for final regulatory approvals, having previously secured extensive resolutions that allow them to explore several direct and indirect methods of fund raising.
The apex bank has however hinted that the March 31, 2026 deadline might not apply to the three banks under its regulatory intervention. These include Polaris Bank, Union Bank of Nigeria and Keystone Bank.
Central Bank of Nigeria (CBN) Governor Mr. Olayemi Cardoso, at the end of the Monetary Policy Committee (MPC) meeting last week had given a status report on the recapitalisation exercise.
Cardoso said total verified and approved capital raised by banks stood at N4.05 trillion as at February 19, 2026. A total of N2.90 trillion or 71.6 per cent came from within Nigeria while $706.84 million, equivalent to N1.15 trillion or 28.33 per cent, came from foreign investors.
He affirmed that 20 banks have fully met their new minimum capital requirements while 13 other banks were at advanced stage of raising the required funds.
Hinting at the March 31, 2026 deadline, Cardoso said the recapitalisation exercise was progressing well and expressed confidence that the process would be completed within the stipulated time.
A senior investment banker, who craved anonymity because of conditional clauses, said the domestic appetite for strategic banking investments was still relatively high, despite stringent “fit and proper” requirements set by the Central Bank of Nigeria (CBN) for major equity stakes in banks.
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“The fund raising market is still quite active for banks and you should see many deals being closed in the weeks ahead. Yes, the screening this time is tougher, but there are investors out there pulling through the process,” the source said.
Under the guidelines for the recapitalisation exercise, banks are expected to subject their new equity funds for capital verification, before the clearance of the allotment proposal and release of the funds to the bank for onward completion of the offer process and addition of the new capital to its capital base.
The CBN is the final signatory in a tripartite capital verification committee that included the Securities and Exchange Commission (SEC) and Nigeria Deposit Insurance Corporation (NDIC). The committee is saddled with scrutinising new funds being raised by banks under the ongoing banking sector recapitalisation exercise.
Also, Rule 4.1 of the Guidelines for Licensing and Regulation of Financial Holding Companies in Nigeria stipulates that where shares amounting to five per cent of a holding company are acquired through the secondary market, such holding company shall apply for approval from the CBN within seven days of the acquisition.
Experts yesterday generally agreed with the CBN’s special consideration for banks under its regulatory intervention.
Cardoso had last week also addressed concerns about banks currently under its regulatory intervention.
He said such institutions may not follow the same recapitalisation timeline because of legal and structural issues affecting them.
Cardoso said: “We remain actively engaged with all relevant stakeholders to ensure that they have an orderly and credible outcome while maintaining financial stability.”
He assured Nigerians that “depositor funds in these institutions (Polaris Bank, Union Bank, Keystone Bank) remain secure and operations continue under close supervisory and regulatory oversight of the Central Bank.”
Managing Partner, Biodun Adedipe and Associates, Prof Biodun Adedipe, said it was in order for the apex bank to ensure orderly exit of banks under its regulatory intervention.
He said the apex bank’s considerations could include performance evaluation of the regulator-appointed management and avoidance of systemic risk.
Former President, Chartered Institute of Bankers of Nigeria (CIBN), Mr. Okechukwu Unegbu said the special consideration for the CBN-managed banks was justified and better than outright liquidation which will be more painful.
Analysts said a bank such as Polaris Bank, which had won several awards for operational excellence and had recovered into steady profitability has a strong chance of fully recapitalising as a standalone entity.
In March 2024, the CBN released its circular on review of minimum capital requirement for commercial, merchant and non-interest banks. The apex bank increased the new minimum capital for commercial banks with international affiliations, otherwise known as mega banks, to N500 billion; commercial banks with national authorization (N200 billion) and commercial banks with regional license (N50 billion).
Others included merchant banks (N50 billion); non-interest banks with national license (N20 billion) and non-interest banks with regional license will now have N10 billion minimum capital. The 24-month timeline for compliance ends on March 31, 2026.
Under the new minimum capital base, CBN uses a distinctive definition of the new minimum capital base for each category of banks as the addition of share capital and share premium, as against the previous use of shareholders’ funds.
