3-tier Nigeria banks face mergers, licence downgrades as CBN deadline looms

Fitch Ratings has warned that Nigeria’s third-tier banks face a heightened risk of mergers, acquisitions (M&A), or licence downgrades as they struggle to meet the Central Bank of Nigeria’s (CBN) new capital requirements.

While first- and second-tier banks have made progress in raising fresh capital, smaller banks have lagged, making consolidation or downgrades the most viable options.

In March 2024, the CBN significantly raised paid-in capital requirements—including share capital and share premium—for commercial, merchant, and non-interest banks. The move aims to strengthen financial stability and ensure adequate buffers against economic shocks.

According to Fitch, top-tier banks have leveraged shareholder support and capital markets to raise funds, while third-tier banks struggle to attract necessary capital inflows. Many have yet to finalize recapitalization strategies or obtain shareholder approvals.