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Recapitalization: Over 12 banks face takeovers, mergers



CBN reviews guidelines on repatriation of FX proceeds by oil firms

…as race to meet CBN’s N500 billion capital base begins

Out of the 25 Money Deposit Banks (DMBs) presently operating in the country, only eight are likely to remain standing at the end of the April 1, 2026 deadline set by the Central Bank of Nigeria (CBN) for the banks to meet the new recapitalization requirements, Business Hallmark is projecting.

The remaining 19 banks, especially those with strong family ties or are largely regional banks, will most likely not be able to meet the capital requirement, ending up either being swallowed up by bigger banks through mergers and acquisitions, or consider downgrading their licences.

According to BH findings, all the banks will need about N4.7 trillion to meet the recapitalization benchmark, with the 12 leading banks in the Nigeria Exchange Limited (NGX) needing N2.8 trillion while others outside the NGX require an estimated N1.9 trillion funds

The CBN, it would be recalled, had on Thursday, March 28, 2024, announced the commencement of the much awaited recapitalization exercise for DMBs, which mandates substantial increases in their minimum capital base according to the scope of their operations.

For instance, while commercial banks that want to get international licences will need to upgrade their capital base to N500 billion, national banks must capitalized to the tune of N200 billion, regional banks N50 billion, non-interest banks seeking national licence N20 billion and non-interest banks seeking regional approval N10 billion.

The announcement was made by the CBN’s acting Director of Corporate Communications, Mrs. Hakama Sidi Ali, who warned the banks that the Shareholders’ Fund will not be considered.

According to Sidi Ali, the new capital requirement will consist solely of paid-up capital and share premium. She disclosed that all banks are required to meet the minimum capital requirement on or before March 31, 2026, and advised them to consider raising fresh equity capital through rights issues, private placements, and offers for subscription, as well as pursuing mergers and acquisitions.

“The minimum capital shall comprise paid-up capital and share premium only and shall not be based on the Shareholders’ Fund.

“Additional Tier 1 (AT1) Capital will not be eligible for meeting the new requirement. Despite the increase in capital, banks must ensure strict compliance with the minimum Capital Adequacy Ratio (CAR) requirement applicable to their license authorisation”, the CBN circular had stated.

The announcement that the new capital requirement for financial institutions shall be restricted to paid-up capital and share premium, however, caught stakeholders in the banking industry napping, with most of them erroneously concluding that virtually all the financial institutions, especially, Tier-1 banks, had already surpassed any figure that might be announced by the CBN

They had largely based their assumptions on the belief that the CBN will allow the banks to add their Shareholders’ Fund to their paid-up capital and share premium in the computation of their capital bases.

However, with the CBN’s exclusion of banks shareholders’ fund from the minimum capital requirement, all the banks fell short of the new requirement.

For instance, Zenith Bank’s capitalisation, which stood at N2.07 trillion (with the addition of its Shareholders’ Funds) before the apex bank’s new requirement, fell to N270.75 billion. Zenith Bank will need additional N229.26 billion to scale the new requirement.

Also, Access Bank, with a capitalisation of N1.92 trillion pre-CBN’s announcement, is now left with only N251.81billion and will need additional N248.19 billion to reach the new threshold. Likewise, Ecobank, with a pre-CBN announced capital base of N353.51 billion, must raise N146.49 billion to remain an international bank; First Bank of Nigeria Holdings Plc with N251.34 billion must raise another N248.66 billion to retain its licence; GTBank with N138.19 billion capital base must scale up by another N361.81 billion; Fidelity Bank with N115.31 billion, will need to raise N384.70 billion; FCMB with N125.29 billion must secure additional N374.71 billion in capital; while UBA will need to raise additional N384.18 billion in addition to its current capital of N115.82 billion.

Also, Stanbic IBTC with N109.26 billion capital, will need to raise N390.74billion. Sterling Bank with N57.15 billion on the other hand, must source for a whooping N442.85 billion.


Other banks, especially Tier-2 and Tier 3 banks, are far off from CBN’s required numbers.

BH calculations show that the 25 banks combined will need to raise additional N4 trillion combined to be able to meet the CBN’s new target.

However, apart from the FUGAZ banks (First Bank, UBA, GTB, Access and Zenith Banks), the top 5 Nigerian banks considered too big to fail, as well as Ecobank, which will struggle a bit to meet the benchmark despite their strengths, all other banks that are currently on less than N200 billion capital base standing, will most probably be consumed by the exercise.

Best placed to scale the new capital requirement hurdle is not any of the top five banks, but Ecobank, with a post-CBN announced capital base of N353.51 billion. The pan-African bank needs only N146.49 billion to remain an international bank.

BH team of analysts believe the bank will easily meet the new target of N500billion owing to its spread and strong showing in Sub-Saharan Africa.

“Ecobank Transnational Inc. (ETI) is a pan-African banking conglomerate, operating in 33 African countries.

“Without doubt, it is the leading banking group in West Africa and Central Africa, serving wholesale and retail customers.

“It also maintains subsidiaries in Eastern and Southern Africa. ETI has an affiliate in France, and representative offices in China, Dubai, South Africa, and the United Kingdom.

“I think the ETI group, without breaking sweat, can easily mobilise funds from its affiliates around the world to raise the balance of N146.49billion, which is about $117million at the current official exchange rate”, said one of the analysts.

Another bank that is in a pole position to meet the new requirement is Zenith Bank Plc. With a capital base of N270.75 billion, the owners of Zenith Bank will only need another N229.26 billion to scale the new hurdle.

According to BH findings, the Jim Ovia led bank will not find it too difficult to source for the needed N229.26 billion for Zenith Bank to remain an international bank.

According to data obtained from the Nigerian Exchange Limited (NGX) by BH, Ovia holds a significant 16.2-percent stake, which translates to 5,072,104,311 ordinary shares in the Zenith Bank.

At the close of trading on the NGX on Friday, April 5, 2024, Zenith Bank emerged as the 10th most valuable stock on the bourse with a market capitalization of N1.335 trillion, about 2.28% of the Nigerian Stock Exchange equity market.

In November 2015, Forbes ranked Ovia, the founder of Zenith Bank, amongst Africa’s 50 richest men with a net worth of $550million. Further checks by BH indicate that the businessman is currently worth around $980 million.

While only 16.2 percent shares of Zenith Bank (translating to 5,072,104,311 ordinary shares) are attributed to Ovia, sources in the banking industry disclosed that the Edo-born billionaire most likely owns more than that.

“It is an open secret in the banking industry that most banks owners and directors don’t disclose their actual stakes in the banks they have interests in. And I won’t be surprised if it is later revealed that more shares are held on his (Ovia’s) behalf by appointed proxies.


“So, I don’t think N38.5billion (which is the percentage contribution of his own share of the 16.2 percent stake in Zenith Bank, or even N100billion will be too much for someone worth almost a billion dollars to cough out.

“The bank (Zenith) is owned by institutional investors, who won’t find it hard to raise the money”, said a source in the industry.

Like Zenith and Ecobanks, Access Bank, as well as GTBank are also going to successfully meet the CBN’s deadline of April 2026 to recapitalize to the tune of N500billion.

According to BH findings, the two banks are owned by most connected and well oiled Nigerian families.

For instance, findings showed that while GTBank is majorly owned by powerful individuals and institutional investors from the South West, Access Bank is owned principally by influential businessman and families from the South South geopolitical zones.

Though many Nigerians are in the dark about the real promoters of GTBank apart from names such as Fola Adeola; Tayo Aderinokun; former Lagos Deputy Governor, Femi Pedro; scion of the Osibodu family, Gbolade Osibodu; Femi Akingbe and Akin Opeodu, our correspondent reliably gathered that silent promoters of the bank comprise of A-list of who is who in Nigeria from the late Bode Agusto to Alhaji Aliko Dangote; Alhaji Muhammed Jada; Akin Kekere-Ekun, Nigeria’s first professor of Geology, Prof. Mosobalaje Oyawoye and Chief J.K. Agbaje, among several others.

“The core promoters of GTBank – Adeola, Aderinokun and Bode Agusto – were friends from their secondary school years at St. Gregory’s College, Obalende, Lagos.

“Late Aderinokun went on to marry Agusto’s sister, who had been Adeola’s classmate at the Methodist Boys’ High School, Lagos. Their paths later crossed in the job market. This shared background oiled the process leading to the success of the bank.

“A few businessmen and politicians like Aliko Dangote and Muhammed Jada are also involved in the bank. It was Aliko, who sold the idea of floating a bank to Fola Adeola. He even contributed some of the seed money for the take-off of the bank, which was converted to equity for him.

“Likewise, Muhammed Jada was recruited by Akin Kekere-Ekun, MD of Habib Bank after he was approached by Adeola to recruit persons of integrity and influence within his political network from Northern Nigeria.

“One of the promoters, Chief Agbaje, was instrumental in obtaining a banking licence for the bank. Osibodu, like Aderinokun, was a friend of Chief Agbaje’s son, whom he persuaded to help recruit his father.

“In the process of applying for the banking licence and getting investors to pay up, Adeola and late Aderinokun brought in several prominent Nigerians, who invested considerably in the bank”, a source in the bank declared.

Apart from prominent Nigerians, institutional investors like the Old Mutual Investment Group founded by South African businessman, John Fairbairn, together with several other prominent Cape Town figures, such as popular politician Saul Solomon, also have considerable interests in GTBank.

“So, I don’t see the bank going under while these people and institutions are still alive and active”, the banking source added.

In the same vein, Nigeria’s biggest bank by customer base, Access Bank, barring an unexpected unravelling, is expected to scale through the recapitalization exercise. With the bank’s current capital base standing at N248.19 billion, it only needs additional N248.19 billion to reach the new threshold.

Meanwhile, the promoters of the bank with massive shareholding include the Estate of Wigwe Herbert Onyewumbu; Aigboje Aig-Imoukhuede; Amundi Ireland Ltd. (United Kingdom); Tundra Fonder AB; Blakeney LLP; Trustus Capital Management BV; Old Mutual Investment Group (Pty); Amundi Asset Management SA (Investment Management); Investec Asset Management Ltd.; Roosevelt Ogbonna and Silk Invest Ltd.


While financial experts project that meeting the new CBN hurdle won’t be a major problem for Access Bank and its backers, they are worried that the expected dilution of the existing shareholdings of its major shareholders could trigger a fierce boardroom crisis in the future.

Meanwhile, First Bank, which recorded a capital base of N251.3 billion in its unaudited financial statement as at September 2023, would require additional N248.7 billion to meet the new capital base. Due to the strong ownership structure of the bank, which include wealthy individuals and institutions like Chief Mike Adenuga and Femi Otedola, Nigeria’s second and fourth richest men, as well as institutions, such as Leadway Group, owners of Leadway Assurance, BH projects that First Bank is expected to also scale the recapitalization hurdle.

While the first 4 FUGAZ banks are expected to meet the CBN’s new capital requirement without breaking much sweat, the fate of the fifth, UBA, however, hangs in the balance. As the least capitalized of the top five banks with a current capital base of N115.82billion, UBA will need to raise a whooping N384.18billion within the next 24 months to remain in business as an international bank.

Owing to the almost total ownership of the bank and its control by its chairman, Tony Elumelu, experts argue that the Delta State born billionaire will bear almost singlehandedly the burden of sourcing the needed funds.

In 2015, the influential American journal, Forbes, rated him the 31st richest man in Africa, with a net worth of $700 million. However, multiple sources told BH that his current personal worth stands at a little over $1billion.

This means that without any other known major shareholder to help share the burden, Elumelu is expected to either sell off some of the shares in his blue-chip companies or cough out more than one-quarter of his wealth totaling $268million to make sure UBA remains an international bank. Although these top players are expected to go through, their current ownership structure may likely change as new interests, both institutional and individuals take ownership stakes and positions in them. The present major owners may be in the twilight of their majority control of the banks.

The fate of the remaining banks, meanwhile, is quite dicey, as most of them will either get swallowed up in a merger or downgrade to lower licenses for them to remain in operations.

For instance, while Fidelity Bank’s capital base of N129.71 billion is very low; FCMB is also low on N125.29 billion and Union Bank N148.09.

The three banks will need to raise an additional N370.29 billion, N374.71 billion and N351.91 billion respectively for them to meet up with the new capital benchmark.

Others at the rung of the ladder are CitiBank N14.44 billion; Polaris Bank N50.43 billion; Standard Chartered Bank Limited N45.42 billion; Sterling Bank N57.15 billion; Titan Trust Bank N29.20 billion; Unity Bank N16.33 billion and Wema Bank N15.13 billion with paid-up capital and share premium respectively.

These eight banks will need to source for additional capital of N185.56 billion, N149.57 billion, N90.74 billion, N154.58 billion, N142.85 billion, N170.80 billion, N183.67 billion, and N184.87 billion respectively.

Except they want to upgrade, two banks with regional non-interest banking licences, TAJ Bank and Lotus Bank, have already surpassed the requirement to operate their old licenses with current capital bases of N14.06 billion and N13.03 billion respectively.

The new CBN’s capital base, meanwhile, is N10 billion for regional non-interest banking licenses.

For international banks like FCMB and Fidelity, the race to meet the N500 billion hurdle is going to be almost insurmountable. While Fidelity Bank only has one subsidiary, Fidelity UK, FCMB, also has one branch outside Nigeria, namely FCMB UK.

“It is my belief that the two banks will opt to either enter into a merge agreement or downgrade, instead of searching for the elusive billions needed to meet CBN’s target”, an economist, Tunde Awodiya maintained.

Speaking on the development, the Head of Financial Institutions at Agusto & Co, Ayokunle Olubunmi, maintained that aside from the top five banks and Ecobank, other DMBs have no other option than to either merge or reclassify their licenses.


“For those that have a significant amount of money to raise, they will be thinking of probably going ahead to raise the fund or look for another bank that also has that challenge, then come together to form a formidable entity.

“If you look at the international banks, the temptation for FCMB and Fidelity to downgrade to national banks is higher because of the huge amount that they actually need.

“It is higher for Fidelity because they have just one subsidiary, Fidelity UK. However, for FCMB, they have had FCMB UK for a long while but then the temptation to downgrade is still high.

“For the new banks, a lot of them, particularly those with national licenses, the temptation for them to step down to regional banks is very high.

“Luckily for some of them, they don’t even have branches in more than two regions so they can first scale down and then upscale as they raise more capital”, Olubunmi noted.

In his own submission, a professor of Law and developmental economist, Tayo Bello, noted that many banks will not be able to survive the recapitalization.

“Not all of them will be able to cross the hurdle. When Soludo brought up the recapitalization exercise, I think the number of banks in the economy was more than 89 then, before they were reduced to 25. So, I can predict they will come down to 15 or a little above that”, he said.

A recent report by a multinational financial services company, Ernst and Young, estimated that 17 out of the current 25 banks in the country might not meet the capital requirement from the CBN if the threshold is increased 15-fold to N375 billion from N25 billion.

The report was published before the CBN released the guidelines for the recapitalization guidelines.

Ernst and Young stated in its report titled, “Navigating the Horizon: Charting the Course for Banks Amid Plans for Recapitalisation” that the policy may force yet another round of mergers and acquisitions, just like it happened during the last recapitalization exercise in 2004/2005.

“In a worst-case scenario, that is, given a capital multiplier of 15, about 17 out of 24 banks would not meet the new minimum capital.

“The N25 billion capital base in 2005 was an equivalent of $188.2 million, but the figure has plunged significantly to about $18.4 million”, Ernst and Young noted.

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