As the Central Bank of Nigeria (CBN) considers a new banking sector consolidation, findings by The PUNCH reveal that major banks with foreign subsidiaries presently command a substantial capital base of N9.6 trillion. This data illustrates that five key banks individually possess capital exceeding N1 trillion each.
The proposed consolidation, yet to be fully detailed by the CBN, is anticipated to impact national, regional, and merchant banks, particularly those that haven’t significantly increased their capital base compared to counterparts with foreign subsidiaries.
CBN Governor Olayemi Cardoso, in a recent address at the Bankers’ Dinner, emphasized the need for banks to raise their capital base. He cited the necessity to support the projected $1 trillion economy outlined by President Bola Tinubu and the impact of currency devaluation on bank operations.
Seven tier-1 banks, including Zenith Bank, Access Bank, FBN Holdings, GT Bank, and United Bank for Africa, currently boast a collective capital base of N9.6 trillion as of the end of the 2022 financial year. This potentially positions them favorably for the upcoming recapitalization exercise.
The CBN’s drive for recapitalization aims to align the banking sector with the envisioned larger economy. However, the specific minimum capital requirement has not been disclosed, prompting stakeholders to emphasize the importance of careful consideration to avoid a repeat of challenges faced during the 2005 consolidation.
While some industry analysts believe the capital market is well-positioned to support the recapitalization, others express doubts, citing the current dominance of domestic investors and the need for a clear and consistent foreign exchange policy to attract foreign investors.
The banking industry’s varied reactions to the proposed consolidation include merger and acquisition talks among CEOs, reflecting the sector’s dynamic response to potential changes.