The Central Bank of Nigeria has cautioned deposit money banks against sourcing capital from illicit channels as part of the ongoing recapitalization process.
The apex bank stated that this measure is essential to maintain financial system stability and ensure the banking sector remains robust enough to support the country’s $1 trillion economic target.
At the 36th Finance Correspondents Association of Nigeria and Business Editors seminar in Abuja on Monday, the Director of Banking Supervision at the CBN, Dr. Olubukola Akinwunmi, noted that while the recapitalization exercise is intended to prepare the sector for greater responsibilities, the bank will maintain strict regulatory oversight.
Akinwunmi said, “We ensure there is proper verification. And the verification is to ensure that we do not encourage illicit funds into our banking system. Illicit funds can only destabilise the banking system.”
He explained that the new minimum capital thresholds set by the bank on March 28, 2024, were aimed at addressing structural imbalances in the economy and equipping banks to withstand both domestic and global challenges.
According to the new requirements, international commercial banks must meet a minimum capital of N500 billion, while national commercial banks are required to raise theirs to N200 billion.
Regional commercial and merchant banks are required to raise a minimum of N50 billion each, while non-interest banks at the national and regional levels must meet capital bases of N20 billion and N10 billion, respectively.
Akinwunmi stated that the recapitalization exercise, which began on April 1, 2024, will last for 24 months, concluding on March 31, 2026.
He also noted that the capital requirements are already in effect for new banking license applications.
The banking sector, he noted, has shown resilience over the years and remains sound across key prudential indicators.
“We have just completed certain examinations and research to give us the reassurance that our banks are on a strong footing. Our banks are standing on sound footing when it comes to liquidity, capital adequacy and non-performing loans,” he said.
He further added that the exercise would position banks to better withstand rising global tensions and macroeconomic uncertainties.
“The recapitalisation is also about strengthening the financial system for the future. Larger capital bases translate to greater capacity to fund high-impact sectors such as infrastructure, manufacturing, and agriculture. Banks must be ready for the emerging global order,” he said.
He noted that the CBN has adopted a phased implementation approach to ensure that banks can continue operating effectively while raising capital.
He also mentioned that banks have access to flexible funding options, including public offers, rights issues, mergers, acquisitions, and strategic foreign investments.
Additionally, he noted that banks may opt to downgrade their licence types if necessary, without affecting their regulatory standing.
On corporate governance, he noted that stronger capital would attract more investors, who would, in turn, demand greater transparency and compliance with anti-money laundering and terrorism financing regulations.
Akinwunmi also clarified that the CBN has reverted to its original definition of share capital—consisting of paid-up capital and share premium—in line with the legal provisions of the Banks and Other Financial Institutions Act.
He emphasized that the recapitalization programme would strengthen banks’ capacity to support the growth of SMEs, drive job creation, and improve access to credit for key sectors that directly contribute to GDP growth.
He added that the exercise would also enhance financial inclusion, foster innovation, and consolidate the banking system to make it more competitive on a global scale.
“Our banks are ready for the emerging challenges that the global economy faces. With stronger capital buffers, they will be better positioned to navigate external shocks and support the trillion-dollar vision of this administration,” Akinwunmi said.
Also speaking at the seminar, the Deputy Governor of the CBN, Ms. Emem Usoro, emphasized that Nigeria must maintain a strong, stable, and well-capitalised banking sector to achieve its goal of becoming a $1 trillion economy.
In her keynote address, Usoro described the recapitalization exercise as a vital policy response to global financial developments, aimed at boosting the banking system’s ability to effectively fund and drive economic growth.
She recalled that the last major recapitalization exercise in 2004, which raised the minimum capital base to N25 billion, led to a reduction in the number of banks from 89 to 25 and helped stabilize the sector.
However, she noted that with growing global financial flows, emerging risks, and Nigeria’s renewed development ambitions, there is now a need for a more robust financial intermediation framework.
“As we aspire to build a $1tn economy, all hands must be on deck,” she said.
According to the deputy governor, the recapitalisation drive is not just about raising capital but also about improving financial system resilience, fostering competition, and positioning Nigerian banks to support development financing.
“We must consider the recapitalisation of our banks to be able to fund, finance and power the economy and favourably compete globally with its peers in other climes,” she said, urging stakeholders to provide sustained support through policy clarity, implementation discipline, and strategic communication.
Usoro also praised the media for its role in shaping public understanding of monetary policy reforms and called for increased collaboration between regulators, financial institutions, and journalists to enhance effective communication and public awareness.
