A new report suggests that the Central Bank of Nigeria (CBN) may instruct commercial banks with international banking licenses to increase their capital base to over N900 billion. This development aligns with the CBN’s goal, as stated by Governor Olayemi Cardoso a few months ago, to prompt lenders to raise more capital in support of the Federal Government’s vision to grow the economy to $1 trillion.
The report, titled “Nigerian banks: On the cusp of a new dawn,” produced by CardinalStone Securities, projects capital base increases ranging from N181.85 billion for regional banking licenses to N909.27 billion for international banking licenses. The projections are based on the prospect of the CBN returning to the capital base-to-GDP ratios set in 2005, with ratios ranging from 0.04% for regional banks to 0.22% for commercial banks.
While the report acknowledges that the decline in capital base requirements since the 2005 recapitalization exercise may be scaled by most banks, achieving the ambitious $1 trillion economy goal within seven years might necessitate even higher capital base requirements. Tier-1 international banks such as Zenith Bank and UBA are expected to surpass the implied thresholds in this scenario.
The report anticipates ongoing monitoring of developments in this space to observe the CBN’s final decisions on capital base requirements, along with the structure of directives and timelines.
