Recapitalisation: N4.65tr new capital to boost credit for infrastructure, manufacturing

Governor Cardoso commented: “The recapitalisation programme has strengthened the capital base of Nigerian banks, reinforcing the resilience of the financial system and ensuring it is well-positioned to support economic growth and withstand domestic and external shocks.” Continuing, he added that Nigeria’s banking system remains fundamentally sound and resilient, a cornerstone of its 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.

READ ALSO: Obasanjo’s Tinubu branding

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.

The CBN said a limited number of institutions remain subject to ongoing regulatory and judicial processes, which are being addressed through established supervisory and legal frameworks. All banks remain fully operational, ensuring continued access to banking services for customers. The programme has strengthened capital adequacy ratios (CAR), with the sector maintaining levels above international Basel benchmarks. Minimum CAR thresholds remain at 10 per cent for regional and national banks and 15 per cent for banks with international authorisation. The recapitalisation, implemented alongside an orderly exit from regulatory forbearance, has improved asset quality, reinforcing balance sheet transparency and overall financial system stability.

According to the CBN, to safeguard these gains, the apex bank has strengthened its risk-based capital adequacy framework, requiring banks to conduct regular stress testing across defined scenarios and maintain appropriate capital buffers. Key regulatory measures, including prudential guidelines and the supervisory framework, are subject to periodic review to support ongoing strengthening of governance, risk management, and sector resilience. “The recapitalisation programme was carried out without disruption to banking services, ensuring continuous access for individuals and businesses throughout the process. The successful completion of the programme establishes a stronger and more resilient banking system, better positioned to support lending, mobilise savings, and withstand domestic and global shocks,” the bank said.

The apex bank reaffirmed its commitment to building a stable, transparent, and resilient financial system—one that inspires confidence among depositors, investors, and the wider public, while strengthening the sustainability of Nigeria’s financial architecture.

CRR and other industry concerns

President, Bank Customers’ Association of Nigeria (BCAN), Dr. Uju Ogubunka, said the exercise presented opportunity for the lenders to provide cheaper loans, expand their operations and provide improved services to customers. “The banks have raised significant funds to shore up their capital bases. Now, we expect them to improve on service quality and shun excess charges,” he said.

The CEO of Economic Associates, Dr. Ayo Teriba, has urged the Central Bank of Nigeria to review its Cash Reserve Ratio (CRR) policy to enable banks to effectively deploy funds raised from the recapitalisation exercise. The CRR represents a portion of a bank’s deposits held with the central bank as reserves. It is a key monetary policy instrument used to regulate money supply, manage liquidity, and ensure financial system stability, with these reserves typically earning no interest. Teriba argued that with the decline in the CBN’s Ways and Means advances from N27 trillion to N3 trillion, alongside improved exchange rate stability and adequate foreign exchange reserves, the apex bank should consider relaxing the CRR policy to allow banks to intermediate funds more efficiently and support economic growth. Currently, the CBN maintains a CRR of 45 per cent for Deposit Money Banks, 16 per cent for Merchant Banks, and 75 per cent for non-Treasury Single Account (TSA) public sector deposits.

Also speaking, the President of the Association of Bureaux De Change Operators of Nigeria (ABCON), Dr. Aminu Gwadabe, echoed similar concerns, emphasising the need for lower interest rates to enhance access to credit and stimulate productive investment across key sectors of the economy. Gwadabe said: “We need cheaper loans. Big capital should reflect on cheaper and more affordable loans. Also, banks should lend for longer terms, and projects that support the economy.

He said that more capital will increase banks’ buffers and hasten Nigeria’s path to achieving $1 trillion economy. “Now they have bigger capital, we expect the banks to come out and compete with other global banks. The Nigerian banks need to compete favourably at international stage,” he said. Continuing, Gwadabe said the era of high lending rates should also be over. “We expect the interest charged by banks on loans to reflect international standards. We equally want the banks to de-risk agriculture to improve food security,” he said. 

Restricting loan access to credit defaulters

Already, the CBN recently directed banks to restrict access to certain banking services for large-ticket borrowers with non-performing loans. The move aligns with the regulator’s determination to safeguard financial system stability and strengthen credit discipline. The apex bank gave this directive in a letter sent to all banks and signed by the Director of Banking Supervision, Olubukola Akinwunmi.

According to the CBN, borrowers whose loan facilities are classified as non-performing and recorded in the Credit Risk Management System (CRMS) or any licensed private credit bureau will no longer be eligible to access additional credit facilities. The apex bank said the measure is aimed at limiting the risks posed by large-ticket obligors whose loan defaults could threaten the stability of the banking sector. The bank explained that “effective immediately, all financial institutions shall: Restrict further credit access: Any large-ticket obligor with a nonperforming facility recorded in the CRMS and/or any licensed private credit bureau shall not be granted additional credit facilities.

It added that: “For the purpose of this restriction, credit facilities include loans and other forms of direct credit. In addition, such obligors shall not be granted banking facilities or contingent liabilities such as bankers’ confirmations, letters of credit, performance bonds, or advance payment guarantees,” the bank stated. The CBN noted that these restrictions will apply to borrowers whose exposures meet the definition of large-ticket obligors as outlined in Clause 3.2(d) of the Prudential Guidelines for Deposit Money Banks.

A new look at compliance

The CBN has intensified efforts to strengthen regulatory oversight following the banking sector recapitalisation. The bank has established a dedicated Compliance Department, now fully operational, with mandates spanning financial crime supervision, market conduct, enterprise security, corporate governance, and environmental, social, and governance (ESG) standards. Cardoso noted that the central bank is simultaneously reinforcing controls over newly raised capital through a comprehensive redesign of the credit risk framework. The objective is to ensure that funds mobilised during the recapitalisation exercise are prudently managed and channelled into productive sectors of the economy.

Historically, the banking sector has experienced periods of excess liquidity following recapitalisation, raising concerns among analysts that, without robust risk management systems and regulatory safeguards, such funds could be deployed into high-risk lending, potentially undermining financial stability. To prevent such outcomes, the CBN is implementing stricter governance mechanisms aimed at improving transparency and accountability across the industry. “The process of redesigning the credit risk framework is ongoing to enforce stronger governance, greater transparency, and firmer accountability across the sector. We are determined to break the boom-and-bust cycle that has accompanied past recapitalisation efforts,” Cardoso stated.

In addition, the CBN has enhanced its Credit Risk Management System (CRMS), a web-enabled platform that allows banks and stakeholders to access borrower data in real time, submit statutory returns, and conduct status enquiries. Efforts are also underway to integrate the CRMS with other banking systems to improve efficiency and data accuracy. A report by Deloitte, titled “Nigeria’s macro headwinds trigger bank recapitalisation,” underscores the importance of the exercise, noting that raising banks’ capital base from N50 billion to as high as N500 billion—depending on licence category—is critical to strengthening capital adequacy within the financial sector.

The report highlights that Nigeria’s banks have faced significant pressure from macroeconomic challenges, including high inflation, elevated interest rates, currency volatility, and foreign exchange illiquidity. It adds that the recapitalisation will enhance banks’ capacity to absorb shocks, take on larger risks, and improve liquidity buffers, thereby reinforcing the resilience of the financial system.

Tightening screws on cybersecurity

The apex bank is tightening oversight of cybersecurity, with a new approach that requires financial institutions to first assess themselves. The Central Bank of Nigeria has directed banks, fintechs, and other financial institutions to complete a Cybersecurity Self-Assessment Tool (CSAT)—a structured supervisory framework designed to evaluate their preparedness for cyber threats.

Deposit Money Banks have three weeks to comply, while other financial institutions—including microfinance banks, payment service providers, payment service banks, finance companies, and development finance institutions—are given five weeks. The directive forms part of the regulator’s broader effort to strengthen Nigeria’s digital financial infrastructure amid a surge in cyberattacks. It also signals a shift from reactive enforcement to proactive surveillance, reflecting the increasing digitisation—and vulnerability—of the financial system. The CSAT is comprehensive in scope, assessing cybersecurity governance, accountability structures, risk management frameworks, technology and third-party risks, incident response readiness, and overall operational resilience. It effectively probes how seriously institutions treat cybersecurity at both strategic and operational levels.

Meanwhile, at a high-level workshop titled “Bank Capital Stress Testing: Getting the CBN Directive Right,” organised by DataPro Limited, experts urged financial institutions to treat stress testing as more than a compliance requirement. Instead, it should function as a diagnostic tool for assessing real risk exposure. Speaking at the event, Idris Shittu Adeleke, a member of the DataPro Rating Team and an enterprise risk management expert, highlighted the shift from static reporting to dynamic risk assessment, emphasising the need to align capital buffers with actual risk profiles rather than regulatory minimum thresholds.

DataPro warned that the transition poses short-term risks. Stricter provisioning rules and forward-looking stress assumptions could compress capital buffers, particularly for banks with concentrated exposures. It may also widen the gap between regulatory capital and market perception, as investors reassess the quality of bank balance sheets. Adeleke noted that regulators must balance credibility with financial stability, while banks must reconcile the gains of recapitalisation with the demands of rigorous stress testing. For many analysts, Nigeria’s banking narrative is evolving—from capital accumulation to capital validation. The ultimate test will not be how much capital has been raised, but how resilient it proves under stress.