Banking & Finance, Insights

Regulatory Update: Increase in the Minimum Share Capital Requirements for Banks

REGULATORY UPDATE: Increase in the Minimum Share Capital Requirements for Banks 

Introduction 

The Central Bank of Nigeria (CBN) recently unveiled the Banking Sector Recapitalization Programme 2024 (the “Programme”) which mandates commercial, merchant, and non-interest banks to increase their minimum paid-in common equity capital before 31st March 2026. This marks the first increase since 2004 and aims to enhance the resilience, solvency, and stability of banks with the overarching goal of supporting the achievement of a US$1 trillion Nigerian economy by 2030.  

Here, we highlight the new minimum capital requirements for the affected banks, recapitalization options available and key considerations and implications arising from the Programme.  

New Minimum Capital Requirements (MCR) 

The revised minimum capital requirements for commercial, merchant, and non-interest banks are detailed in the table below.  

License Category  Previous Capital Requirement  New Capital Requirement 
International Commercial Banks   N50 billion   N500 billion 
National Commercial Banks   N25 billion   N200 billion 
Regional Commercial Banks   N10 billion   N50 billion 
National Merchant Banks   N15 billion   N50 billion 
National Non-Interest Banks   N10 billion   N20 billion 
Regional Non-Interest Banks   N5 billion   N10 billion 

In assessing compliance with the new MCR by prospective banks, CBN will only consider Paid-up capital while for existing banks, the CBN will take into consideration the Paid-in capital (that is Paid-up plus Share Premium) only. As a result, bonus issues, shareholders’ fund, other reserves, and Additional Tier 1 (AT1) capital will not be allowed or recognized for the purpose of meeting the new minimum capital requirements.  Nonetheless, relevant reserves will continue to be recognized in the computation and determination of the risk-based Capital Adequacy Ratio (CAR) in line with the CBN’s Guidelines on Regulatory Capital…

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