While the country’s Tier-1 giants appear well positioned to comply with new thresholds, the real drama is playing out among Tier-2 lenders, where agility, strategy, and speed will decide survival.

According to SBM Intelligence’s new report, ‘Capital, Competition, and Consolidation: Assessing Mid-Tier Banking Recapital­isation Strategy’, mid-sized banks are deploying a mix of rights issues, public offers, private placements, and di­vestments to meet the CBN’s March 2026 deadline. The process is reshaping investor sentiment, forcing strategic pivots, and setting the stage for another round of industry consolidation.

The CBN’s recapitalisation order requires international banks to raise their minimum paid-up capital to N500 billion, national banks to N200 billion, and regional banks to N50 bil­lion. Compliance options are limited to fresh equity, merg­ers, acquisitions, or licence reclassification.

For Tier-1 institutions like Zenith, Access, and FBN Holdings, the directive is a test of balance sheet strength but not a threat to survival. For Tier-2 banks, however, it is a defining challenge—one that could either catapult them into greater relevance or force them into mergers and acquisitions.

SBM Intelligence notes that mid-tier lenders have responded with “remark­able urgency and creativity,” adopting tailored capital rais­ing strategies that reflect their market positioning, share­holder base, and long-term ambitions.

Among Tier-2 banks, FCMB Group has unveiled one of the most detailed and comprehensive recapitalisa­tion plans, targeting a total raise of approximately N397– N400 billion.

Its strategy is phased to spread investor exposure and minimise earnings dilution.

Phase One was completed in early 2025, with a public offer that raised N144.6 bil­lion, oversubscribed by 33 percent. FCMB also initiated a convertible note issuance expected to bring in N20–N40 billion by Q3 2025.

Phase Two involves a di­vestment of minority stakes (25–30%) in subsidiaries Cred­it Direct Limited and FCMB Pensions Limited, through IPOs and private placements, targeting N80–N90 billion.

Final Phase will involve private placements with off­shore development finance institutions, likely in the form of preference shares or another public offer, aimed at raising the remaining N170 billion.

By balancing divestments with equity raises, FCMB aims to preserve shareholder value while signaling resil­ience to both domestic and foreign investors.

Fidelity Bank’s strategy is defined by speed and scale. Determined to complete its recapitalisation well ahead of the deadline, Fidelity launched a combined Public Offer and Rights Issue that was oversubscribed by 238% and 138%, respectively—rais­ing more than N270 billion.

With shareholder approv­al, Fidelity is increasing its is­sued share capital from N26.7 billion to N36.7 billion, creat­ing an additional 20 billion ordinary shares. The bank is now preparing for its final phase of capital raising, with the goal of not just meeting but potentially exceeding the N500 billion requirement for international banks.

This aggressive play posi­tions Fidelity Bank as a strong contender to cross into Tier-1 territory, leveraging investor confidence and early-mover advantage.

Sterling Financial Hold­ings Company—parent of Sterling Bank—is taking a multi-stage approach, tapping multiple funding channels to spread investor risk.

It kicked off with a private placement in September 2024, which attracted strong inves­tor interest.

In October 2024, it launched a rights issue to deepen exist­ing shareholder stakes.

The bank is now prepar­ing a public offer to raise $400 million, a move designed to attract international inves­tors while strengthening its capital buffer.

Sterling’s approach reflects its positioning as an innova­tion-driven mid-tier lender with ambitions to remain relevant in a consolidating market. By mixing local and foreign capital sources, it is at­tempting to balance domestic loyalty with global reach.

Wema Bank, Nigeria’s old­est indigenous bank and dig­ital banking pioneer through its ALAT platform, is pursu­ing a two-tranche recapitalisa­tion plan.

In December 2023, it com­pleted a N40 billion rights issue, laying a foundation for bigger moves.

In April 2025, Wema launched a N150 billion rights issue, reflecting its determina­tion to scale up quickly.

A N50 billion private place­ment targeting institutional and strategic investors was also approved at its May 2025 AGM.

Altogether, Wema is eyeing N240 billion in new capital, an ambitious figure for a bank often seen as vulnerable to Tier-1 dominance. Its digital strengths may help it attract tech-savvy investors, but questions linger about mar­gins and asset quality amid Nigeria’s volatile economy.

What It Means For The Industry

The recapitalisation wave is forcing Tier-2 banks into bold strategies, but its impli­cations stretch beyond bal­ance sheets.

Investor Confidence: Oversubscribed offers at Fidelity and FCMB suggest strong market appetite for well-structured banks. This could encourage foreign in­vestors to re-enter Nigeria’s banking space after years of caution.

Consolidation Pressure: Not every bank will succeed. Smaller mid-tiers or those with weak governance may become acquisition targets, fuelling mergers and poten­tially reducing Nigeria’s cur­rent number of commercial banks.

Competition With Ti­er-1s: Successful Tier-2 re­capitalisations could alter competitive dynamics. Fi­delity, for example, is well on its way to joining the Tier-1 club, intensifying rivalry at the top.

Impact On Customers And Employees: While recapitalisation should strengthen banking services and stability, industry consoli­dation could trigger job losses and reduce branch presence in some regions.

The parallels with Ni­geria’s 2004–2005 recapital­isation are striking. Then, banks were required to raise capital to N25 billion, leading to a wave of mergers that cut the number of institutions from 89 to 25. The survivors emerged stronger, but inte­gration pains and governance lapses created fresh challeng­es.

This time, the bar is much higher—N500 billion for inter­national banks—and the oper­ating environment far more complex, with inflation, FX volatility, and digital disrup­tion adding to the mix.

Yet, SBM Intelligence argues that the stakes are equally clear: “Those who adapt swiftly will emerge stronger. Those who cannot will be forced into marriages of convenience—or exit the stage entirely.”

Nigeria’s Tier-2 banks are demonstrating creativity, urgency, and determination in their capital-raising strat­egies.

FCMB is spreading its bets across divestments and equity.

Fidelity is moving with speed and scale. Sterling is mixing local loyalty with in­ternational ambition. Wema is leaning on its digital edge to woo investors.

But the race is far from over. By 2026, the sector will almost certainly look leaner, stronger, and more consol­idated. For some, recapital­isation will be a launchpad into Tier-1 status. For others, it will be the end of indepen­dence.

What is beyond doubt is that the next 18 months will define the future of Nigeria’s mid-tier banks, and by exten­sion, reshape the architecture of Africa’s largest banking market.