New banking licence applicants will be subject to recapitalisation requirements.

With one year remaining before the new bank capital base officially takes effect, prospective entrants into the banking industry must adhere to the updated capital requirements. Speaking at the 36th edition of the Finance Correspondents and Business Editors Association of Nigeria (FICAN) workshop, the Director of Banking Supervision at the Central Bank of Nigeria (CBN), Dr. Olubokola Akinwumi, emphasized that all banking licence applications submitted after April 1, 2024, must comply with the new policy.

“While existing banks have a 24-month window — from April 1, 2024, to March 31, 2026 — to meet the minimum capital requirements, the new threshold applies immediately to all fresh banking licence applications submitted after April 1, 2024,” he said.

Dr. Akinwumi also noted that the theme of the workshop, ‘Playing the Game: Banking Recapitalisation towards a One-Trillion Dollar Economy’, aligns with the CBN’s recapitalisation drive. He added that the move anticipated evolving global economic shifts, particularly those influenced by the policies of the Donald Trump administration.

Akinwumi revealed that the CBN has established guidelines to detect and prevent the use of illicit or borrowed funds in the recapitalisation process. He stressed that permitting questionable capital into the banking system could undermine the credibility and stability of the financial sector.

With the recapitalisation policy firmly underway, Akinwumi maintained that Nigerian banks are well-positioned to tackle the economic challenges arising from the policy directions of the Trump administration.

Akinwumi explained that the recapitalisation initiative aims to strengthen the financial system, enhance lending capacity, boost competitiveness, and encourage consolidation and innovation.

“As banks explore mergers or adopt innovative capital-raising strategies, we anticipate the emergence of more efficient and tech-driven institutions. This recapitalisation will foster the development of stronger banking entities capable of driving progress in digital banking, fintech, and financial inclusion,” he added.

He further clarified that the recapitalisation is crucial for securing the necessary funding to reach the goal of a $1 trillion economy, a target the current administration is actively working towards.

In his presentation, “Banking Recapitalisation Towards a One-Trillion Dollar Economy: The Industry Perspective,” United Bank for Africa (UBA) Managing Director, Oliver Alawuba, suggested that Nigerian banks are capable of managing the country’s foreign reserves, starting by domesticating 20 to 30 percent of the reserves.

“In the 19 countries where UBA operates, we manage the foreign reserves of some nations. If foreign entities can trust us with this, the CBN could consider allowing us to manage part of Nigeria’s foreign reserves,” he remarked.

Alawuba also highlighted that Nigerian banks are making significant sacrifices for the economy by relinquishing 50 percent of their cash reserve ratio (CRR), which they mobilised at a cost. He proposed that banks could be encouraged to provide long-term support to the economy by unlocking and investing 40 percent of the CRR.

To achieve the $1 trillion economy goal by 2030, Alawuba stressed the need for focused efforts to build stronger and more resilient banks. “At the current growth rate of 3.84 percent, we won’t reach a $1 trillion economy. For that to happen, we need to grow at double-digit rates, with a minimum of 10 percent. This economy requires a transformation that drives growth to at least 10 percent if we are to achieve $1 trillion by 2030,” he concluded.