The Nigerian banking sector is undergoing a significant recapitalization exercise mandated by the Central Bank of Nigeria (CBN) to strengthen the industry’s capacity to support the nation’s economic growth ambitions, including achieving a N1 trillion economy. This initiative requires banks to substantially increase their capital base, leading to a projected capital shortfall of N4.2 trillion, with over N2 trillion needing to be raised between 2025 and 2026. This ambitious undertaking has sparked debate and raised concerns about the potential impact on smaller banks, the possibility of industry consolidation, and the overall health of the financial sector. The year 2025 looms large as a pivotal period for the banking industry, with its performance serving as a key indicator of broader economic progress, including financial inclusion, credit accessibility, and economic diversification beyond the oil sector.
The recapitalization drive is expected to reshape the banking landscape, potentially triggering mergers and acquisitions, mirroring the 2005 reforms that significantly reduced the number of banks operating in Nigeria. This consolidation could lead to job losses, posing challenges for employees and smaller banks struggling to meet the new capital requirements. While the CBN’s initiative aims to build a more resilient banking sector, external pressures such as foreign exchange fluctuations and inflation could impact the USD valuation of the capital base, potentially undermining the effectiveness of the exercise. There are differing views on the necessity of mergers and acquisitions. Some analysts suggest they are inevitable, while others, like stockbroker David Adonri, believe the Nigerian capital market has the capacity to provide the necessary funding, mitigating the need for consolidation. Adonri emphasizes the potential for growth in the Nigerian banking sector, given the large underbanked population and the country’s geographical expanse, arguing that more conventional banks are needed to serve the expanding economy.
The Securities and Exchange Commission (SEC) has implemented measures to facilitate the capital raising process, including a timetable for bank offerings to prevent market saturation and investor fatigue. The introduction of the NGX public offering portal has expanded the reach of the Nigerian capital market globally, enabling investors worldwide to participate in Nigerian public offerings. This increased access to international capital further strengthens the ability of banks to meet the new requirements. The SEC has reported significant progress in the recapitalization efforts, with Nigerian banks raising N1.7 trillion through e-offerings since the commencement of the exercise. This substantial amount reflects the positive response from investors and the effectiveness of the NGX’s E-offering platform, NGX Invest, which has streamlined the investment process and broadened participation.
NGX Invest, a key component of NGX Group’s digital strategy, has simplified the traditionally complex process of investing in securities, making it more accessible to a wider range of investors, including those in underserved areas. The platform leverages technology to facilitate seamless onboarding and identity verification through the Nigeria Inter-Bank Settlement System, using Bank Verification Numbers. This digital approach has significantly reduced the time and complexity associated with investing, promoting greater inclusion and participation in the capital market. Several prominent financial institutions have successfully raised substantial capital through this platform, demonstrating the effectiveness of the recapitalization efforts. Fidelity Bank, Zenith Bank, Sterling Financial Holding Company, and FCMB Group have raised N205 billion, N290 billion, N228 billion, and N150 billion respectively.
Guaranty Trust Holding Company raised N400.5 billion through a public offer, while Access Holding secured N351 billion from a rights issue, exceeding the CBN’s N500 billion minimum capital requirement for internationally authorized banks well ahead of the March 2026 deadline. Access Bank’s proactive approach has positioned it as a leader in the recapitalization effort, boosting its share capital to N600 billion, significantly above the regulatory minimum. This achievement not only underscores the bank’s commitment to meeting regulatory requirements but also demonstrates the strength and confidence of its investors. The successful capital raising by Access Bank and other institutions reflects the resilience and potential of the Nigerian capital market, despite ongoing economic challenges.
The chairman of Access Holding, Aigboje Aig-Imoukhuede, expressed confidence in the Access brand’s resonance with both local and international capital markets, highlighting the bank’s history of successful capital raising initiatives to meet successive CBN recapitalization directives. He acknowledges the support of the CBN and SEC in ensuring the integrity and success of the rights issue, and expresses gratitude to shareholders for their unwavering support and confidence in the company’s vision. As the banking sector navigates this period of transformation, the success of the recapitalization exercise will be crucial for strengthening the industry’s stability, fostering economic growth, and promoting financial inclusion across Nigeria. The coming years will reveal the long-term impact of this ambitious undertaking and its contribution to the overall development of the Nigerian economy.
