The Brief: Nigerian Central Bank’s recapitalisation reform spurs M&A activity
The Event
On March 28, 2024, the Central Bank of Nigeria (CBN) announced an upward review of its minimum capital requirements for commercial, merchant and non-interest banks (i.e. Islamic banks). The CBN aims to fortify the resilience and solvency of the banking sector amidst ongoing macroeconomic challenges. Nigeria’s inflation rate is currently 31.7%, the highest in the country’s democratic history, while the naira’s value has been volatile, hitting ₦1,309/$ yesterday in official markets (-30% YTD).
The CBN’s minimum capital requirement policy signals a pivotal shift in the regulatory landscape since the last recapitalisation exercise conducted 20 years ago.
The new minimum capital requirements, outlined in the table below, have a compliance deadline of March 31st, 2026:
The CBN outlined options banks may pursue to meet these revised requirements, albeit with certain restrictions. Banks may raise capital via private placements, rights issues and subscription offers, mergers and acquisitions, or upgrading or downgrading a
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