Nigeria’s banks brace for recapitalization in ambitious economic overhaul

When I started this newsletter, my goal was clear—to be grounded as a journalist covering Nigeria's economic and business landscape with depth and accuracy. Today's deep dive brings me closer to that mission.

A motivational speaker once said, "Set goals not only to achieve them, but for what they make you become." While I aim to expand my readership and build this newsletter into a profitable intelligence platform, the journey itself-becoming a well-versed journalist tracking Nigeria's shifting economic, business, and cultural dynamics-is already a win-win for both me and my loyal readers.

With that in mind, I welcome you to this edition, the first of a series of deep dives, set to arrive every Wednesday. Though this one comes two days behind schedule, l'm pumped to keep the momentum going, balancing weekly curated intelligence on Nigeria's economy, business environment, and culture every Sunday with deep dives into critical news topics, industry sectors, or key profiles every Wednesday.

In today's feature, we take an in-depth look at Nigeria's banking recapitalisation drive—why it's happening, its ties to currency reforms, and what it means for the country's ambitious push toward becoming a $1 trillion economy.

It's Friday, the first week of May, just after Labour Day-inspired holidays here in Nigeria. As I prep to hit send on the newsletter, the lights have gone off—a timely reminder of the issues shaping Nigeria’s economic and business environment, reinforcing why deep dives like this matter.

Let's dive in.

Samuel Okocha, Editor, 234Digest here.

Nigeria's banking industry is undergoing a transformation as the Central Bank of Nigeria
(CBN) implements a bold recapitalisation policy.

By March 2026, deposit money banks—currently numbering 43— must meet significantly higher minimum capital requirements: ₦500 billion ($333 million) for international banks, N200 billion for national banks, and ₦50 billion for regional banks.

The policy, announced in March 2024, affects Nigeria's seven international lenders, 15 national banks, and a mix of regional, non-interest, merchants, and finance holding companies.

Unlike the last major recapitalization in 2004—when banks all operated under a universal banking license with a homogenous ₦25 billion ($190.8 million @₦131/$) minimum capital—this directive introduces tiered requirements based on banking categories.

The move aligns with broader economic reforms designed to stabilise Nigeria’s financial system amid years of currency depreciation. With the current GDP standing at $363.84 billion in 2023, down from its $574.18 billion peak in 2014, revitalizing key sectors like banking is critical to Nigeria’s push for a $1 trillion dollar economy by 2030.

However, given that an estimated 57% of Nigeria’s economic activity occurs outside the formal sector, the true size of the economy may be significantly higher. Strengthening the banking system is expected to support financial inclusion and ensure that more of this economic activity is captured within the formal framework.

At the official exchange rate (₦1,303/$) on the date of the announcement, the national commercial banks must now maintain a paid-up capital equivalent of $153.5 million, reinforcing efforts to ensure financial resilience against currency volatility.

"As we work towards building a $1 trillion dollar economy, we must consider the recapitalisation of our banks to be able to fund, finance and power the economy, and to favourably compete globally," said Emem Usoro, deputy governor, Corporate Services, CBN, during a seminar held last March in Abuia.

Banking giants lead the charge

Nigeria's largest banks-Access Holdings, Zenith Bank, UBA, FirstBank, and GTCO-are at the forefront of meeting these new requirements. Access Holdings, the nation's biggest lender by assets, was the first to meet the new requirements after raising ₦351 billion through a rights issue. Zenith Bank has also secured sufficient new capital to satisfy the criteria for an international licence.

Other international lenders, including UBA, are actively fundraising to hit the ₦500 billion benchmark while simultaneously going after international expansion. UBA’s strategy, for instance, aligns with its push into France and Saudi Arabia, reflecting how recapitalization can fuel cross-border growth.

"Given the low valuation of Nigerian banks (in USD terms), the relatively good performance of the banks, and the appetite for banking licences as reflected in the number of applications pending with the CBN, we believe the industry should be able to attract the needed investments to shore up the capital base," Agusto & Co., a credit rating agency and research firm with a presence across Africa, notes in its newsletter on CBN's updated capital requirements for banks.

Mid-sized banks face steeper climb

For Nigeria’s 15 nationally licensed banks, including mid-tier lenders like Fidelity and FCMB, the path to recapitalization is far more challenging. While both banks have completed initial fundraising efforts, Fitch Ratings warns that "as second-tier banks, they must raise significantly more capital relative to their balance sheets than larger banks" to retain their international licences.

Unlike their larger counterparts, second-tier banks must strike a delicate balance between strengthening their capital base and maintaining competitive growth strategies. Smaller banks, meanwhile, are weighing mergers or licence downgrades to survive. Providus Bank and Unity Bank's merger, approved in 2024, marked the first consolidation move under the new policy.

The last major recapitalization in 2004 reshaped the banking landscape, reducing the number of institutions from 89 to 25, which gave rise to the major players we see today. Analysts expect similar shifts this time around, with institutional investors and new shareholders poised to enter the market.

Agusto & Co. predicts that "new sectors will be created while some existing industries will be expanded as the banks seek to generate returns for the enlarged capital base." 

Nigeria’s non-interest lenders, such as Jaiz Bank, and merchant banks will also need to recalibrate their strategies to comply with revised capital requirements while sustaining profitability.

Economic ripple effects

In the short term, businesses—especially small enterprises—may experience tighter lending as banks focus on compliance. However, in the long term, a stronger banking system is expected to drive more credit availability, spur innovation, and enhance economic stability.

A tripartite committee comprising the CBN, Security and Exchange Commission (SEC), and Nigeria Deposit Insurance Corporation (NDIC), is overseeing the process to ensure transparency and financial stability.

A bold bet on Nigeria's future

Nigeria's recapitalization effort is an exciting venture with the potential to transform the country's economy and financial scene. If it works out, it won't just bolster Nigerian banks; it could also become a blueprint for other frontier markets looking to use banking reform as a springboard for sustainable growth.

Enjoyed this analysis? There’s more where that came from. Get exclusive deep dives every Wednesday and curated intelligence every Sunday—straight to your inbox. Sign up here.