There’s palpable fear in the banking sector as the March 31 2026 deadline given by the Central Bank of Nigeria (CBN) for deposit money banks (DMBs) operating in the country to raise their capital base is just a few days away.
So far, according to the Governor of the CBN, Olayemi Cardoso 31 out of 33 banks have already met the requirement, the remaining two, Polaris Bank and Keystone Bank still have their fate hanging.
There is fear that there could be a repeat of the experience of the 2004/2005 bank recapitalisation programme where many bank workers lost their jobs and shareholders lost their funds as their banks shut down or went into forced merger arrangements as they could not meet the new capital base.
Leading those that have met the requirements are Access Bank which raised N351 billion through a rights issue, thus helping the bank to exceed the CBN’s minimum requirement of N500 billion. The rights issue, involving 17.77 billion shares at N19.75 each, has strengthened Access Bank’s capital base to N602.8 billion, exceeding the regulatory threshold by N102.8 billion.
Zenith Bank raised over N350 billion through a combination of rights issues and public offers, raising its capital to N614 billion.
Meanwhile, First HoldCo recently confirmed that First Bank reached its N500 billion target having deployed a series of strategic initiatives, including a rights issue, private placement, and the sale of its merchant banking subsidiary.
The government hopes the new banks that will emerge from the exercise will help it in achieving its economic goal of a $1 trillion economy by 2030.
The recapitalisation exercise is also to strengthen stability, build investor confidence, and depositor protection just like the transformative 2004 exercise that created enduring financial powerhouses.
In 2004, the CBN embarked on a major bank consolidation exercise ostensibly to address the chaos in the sector at the time. It raised capital levels of banks from N2 billion to N10 billion for regional banks, to N25 billion for national banks and to N50 billion for international banks. That reform led to sector consolidation, reducing the number of banks from 89 to 25. It also created larger institutions capable of withstanding economic shocks and financing bigger operations.
The current programme, which is expected to end on March 31 2026, was announced in November 2023 and formalized in CBN directives published on March 28, 2024.
The CBN in the new recapitalisation exercise, requires each bank category to hold capital proportional to its operational scope. International commercial banks must raise their capital from N50 billion to N500 billion, national commercial banks must increase from N25 billion to N200 billion. Regional commercial banks must move from their current capital base of N10 billion to a minimum capital of N50 billion. For non-interest banks, the thresholds are set at N20 billion for national licenses, and N10 billion for regional licenses.
As of February 2026, the verified capital raised by the banks in the process of recapitalisation was
N4.05 trillion, of which the percentage of foreign investment was said to be approximately 28.33 per cent or about $706.84 million (N1.15 trillion), while local investors contributed 71.67 per cent or N2.9 trillion.
Expectation is that with a new capital base for banks, the Central Bank of Nigeria (CBN) would have created a more robust and resilient banking sector, a move that is expected to have far-reaching benefits for the economy.
It is also believed that one of the major impacts of recapitalisation is that it will lead to a more stable banking system. With increased capital, banks will be better equipped to absorb potential losses and withstand economic shocks.
This stability is crucial for maintaining investor confidence and attracting foreign investment.
According to experts, “A stable banking system also protects depositors’ funds, which is essential for maintaining public trust.
“At a time of heightened macroeconomic uncertainty, inflationary pressures, exchange rate volatility, and rising credit risks, the strengthening of banks’ capital buffers is both prudent and necessary.”
One of the most compelling justifications for the recapitalisation policy is the dynamic nature of the Nigerian economy. The scale, cost, and complexity of economic transactions have increased significantly over time. Projects that previously required modest financing now demand substantially larger capital commitments due to inflation, currency depreciation, and rising input costs. Consequently, the risk exposure of banks has expanded considerably.
“In this context,” According to the Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, “there must be a clear alignment between the capital base of banks and the scale of risks they undertake.” He said capital adequacy is not static; it must evolve in line with economic realities. “A capital threshold that was adequate two decades ago can no longer deliver the same level of financial strength today. “Adjusting capital requirements is therefore not extraordinary—it is a necessary response to changing economic conditions and the erosion of real capital values.”
One of the significant differences between the 2004 recapitalisation exercise and the current one is the near seamless nature of the ongoing exercise contrary to the disruptive nature of the 2004 version.
Available reports indicate that many of the banks successfully raised fresh capital through rights issues, public offers, and private placements. This stands in sharp contrast to the 2004 consolidation exercise, which was characterised by significant disruptions, including forced mergers, bank failures, loss of shareholder value, and job dislocations.
The current process has, by comparison, been measured, well-sequenced, and market-driven. There has been no evidence of systemic panic, depositor losses, or widespread institutional distress.
Stakeholders express happiness with the Central Bank of Nigeria for managing the process in a manner that preserves stability while achieving its policy objectives.
According to them, the orderly execution of the recapitalisation programme is itself a major confidence booster for the financial system.
What lessons can be learnt from the conduct of the recapitalisation exercise? Professor Godwin Oyedokun of Lead City University, Ibadan says, several lessons emerge from the process. According to him, “Strong capital buffers are critical for financial stability, particularly in an economy exposed to currency volatility and inflation. Second, timely regulatory communication helps financial institutions plan effectively. Third, the reform demonstrates that market-based solutions, rather than government bailouts, can successfully support banking sector restructuring.”
While the recapitalisation programme is a significant step in the right direction, it must not be seen as an end in itself. The ultimate objective of stronger bank capitalisation should be to enhance financial intermediation and support the real economy more effectively.
Oyedokun said for Nigeria to fully benefit from stronger banks, policymakers must ensure that increased capital translates into greater lending to productive sectors such as manufacturing, agriculture, infrastructure, and small businesses.
“With the right regulatory oversight and economic policies, well-capitalised banks can support economic expansion, deepen financial inclusion, and position Nigeria as a leading financial hub in Africa”, he said.
The recapitalisation exercise could also position Nigerian banks to take advantage of emerging opportunities in West Africa. With stronger balance sheets, Nigerian banks can expand their operations across West Africa and beyond, promoting financial inclusion and economic integration. This increased presence can also enhance Nigeria’s position as a regional financial hub.
Dr Yusuf notes that Nigeria continues to face significant gaps in credit delivery, particularly to small and medium enterprises (SMEs), the rural economy, agriculture, and other productive sectors. These segments are critical for employment generation, poverty reduction, and inclusive growth, yet they remain underserved by the financial system.
“With stronger capital bases, banks are expected to increase their risk appetite in a responsible manner, expand credit access, and support productive investments across the economy”, he said, adding that there is also a need for regulatory encouragement to ensure that the benefits of recapitalisation are transmitted to priority sectors that drive broad-based economic development.
He said the progress recorded so far, particularly the orderly and non-disruptive nature of the exercise, is commendable and reflects effective regulatory oversight. “However, the true measure of success will lie in the extent to which stronger banks translate their enhanced capital base into improved credit delivery, deeper financial inclusion, and more robust support for the real economy”, he noted.
In a position paper on the recapitalisation programme, made available to the media, the Centre for the Promotion of Private Enterprise (CPPE), urged the government to complement the gains of the recapitalisation programme with policies that promote inclusive lending, reduce the cost of credit, and strengthen the linkage between the financial system and the productive sectors of the economy.