Onome Amuge
Fitch Ratings has forecasted that Nigerian banks are on course to meet the March 2026 recapitalisation deadline imposed by the Central Bank of Nigeria’s, according to a non-rating commentary published on its website recently.
The assessment, issued as a non-rating commentary, which does not factor into Fitch’s rating decisions, indicated that the agency expects the Nigerian banking sector to successfully meet the CBN’s recapitalisation requirements, alleviating concerns over potential capital inadequacy within the industry.
The CBN issued new capital requirements in March 2024, mandating commercial banks with international licenses to hold a minimum capital of N500 billion, while national commercial banks require N200bn by March 2026.
For regional commercial and merchant banks, the CBN set a minimum capital requirement of N50 billion.
To this end, Nigerian banks are provided with the option of meeting the regulatory threshold through equity injections, mergers, and acquisitions, or by shifting their licensing status.
According to Fitch Ratings, its rated Nigerian banks have made considerable progress toward compliance, with nearly all of the banks either increasing their capital or initiating formal processes for capital raising.
The ratings agency stated: “Nigerian banks are making significant progress in raising core capital to meet new paid-in capital requirements and are generally on track to meet the end-1Q26 deadline. This is supporting a recovery in capitalisation from the impact of the naira devaluation, providing fuel for business growth. It also reduces the likelihood of significant banking sector consolidation.”
Fitch, in its commentary, noted that Access Holdings and Zenith Bank, the two largest banks in Nigeria, have already raised enough fresh capital to meet the N500 billion requirement for an international license.
First HoldCo, United Bank for Africa, and Guaranty Trust Holding Company, on the other hand, have adopted a phased approach, with recent capital raises and shareholder approvals to further increase their capital to reach the N500 billion mark.
Meanwhile, First HoldCo’s and United Bank for Africa’s recent rights issues are awaiting final regulatory approval.
According to the Fitch commentary, Fidelity Bank and FCMB Group, categorised as second-tier banks in Nigeria, have successfully completed initial capital raisings but require additional funding to maintain their international licenses.
The report indicated that due to their comparatively smaller balance sheets relative to the largest banks, these second-tier banks are faced with the challenge of raising more capital as a percentage of their balance sheet size to meet the N200 billion capital requirement for international licensing.
The rating agency also observed that Ecobank Nigeria Limited and Jaiz Bank required only small capital injections to meet their requirements and have already achieved compliance.
“We estimate that ENG is still in breach of its total capital adequacy ratio requirement of 10 per cent, but it has further capital-raising plans to restore compliance. Stanbic IBTC Holdings has launched a rights issue to raise capital to maintain its national licence,” it added.
Fitch noted that a strong investor appetite has contributed to the success of most capital raisings undertaken so far, allowing first- and second-tier banks to increase their capital without the need for other measures. This progress has reduced the likelihood of banking sector consolidation among these banks, Fitch believes.
While most first- and second-tier banks have made strides in meeting their capital requirements, the report highlights a distinct difference in the progress made by some third-tier banks and Union Bank of Nigeria (UBN), which have generally lagged behind in capital raising efforts.
Wema Bank, which has obtained shareholder approval to raise enough capital to retain its national license, plans to commence this process in April, while Coronation Merchant Bank has secured board approval. However, the status of UBN’s approvals remains unclear, according to Fitch.
Fitch Ratings reiterated that third-tier banks in Nigeria, which have generally been slower to raise capital, are more likely to pursue mergers and acquisitions (M&A) or to downgrade their licenses.
