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LAGOS – Nigeria’s banking sector is once again at the threshold of sweeping transformation. The Central Bank of Nigeria’s (CBN) recapitalisation directive, announced in 2024, has triggered the most ambitious capital raising drive since the mid-2000s consolidation era.
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.