CBN gives banks two years to meet new capital base of N500b | Headline News
The Central Bank of Nigeria (CBN) has said that Nigerian banks have 24 months to recapitalize their capital base to at least N500 billion of internationally authorized capital to continue operating in the country.
This comes after the apex bank called on Nigerian banks to take immediate steps to increase their capital base to strengthen the financial system.
The Central Bank of Nigeria (CBN) yesterday announced new minimum capital requirements for banks, fixing the minimum capital base for internationally licensed commercial banks at NOK 500 billion.
The CBN further stated that the new minimum capital for member banks will be N50 billion, while the new requirements for nationally and locally licensed interest-free banks are N20 billion and N10 billion respectively.
A circular signed by Haruna Mustafa, Director General of the Department of Monetary Policy and Regulation, to all commercial banks, commercial banks, non-interest-bearing banks and proponents of proposed banks, states that all banks must meet minimum capital requirements within 24 months of commencement. It is emphasized that the following requirements must be met. Starts April 1, 2024 and ends March 31, 2026.
According to the circular, the move, which was initially disclosed by the CBN Governor, Mr. Olayemi Cardoso, in his address at the Annual Bankers Dinner in November 2023, will continue to strengthen the bank’s resilience, solvency and Nigeria’s growth. The aim was to strengthen the ability to provide support. economy.
The CBN requested that banks consider injecting fresh equity capital through private placements, rights issues and/or underwritten offerings to enable them to meet minimum capital requirements. mergers and acquisitions (M&A); and/or license activation upgrades or downgrades.
The circular further clarified that the minimum capital will consist only of paid-up capital and share premium. He stressed that the new capital requirements are not based on shareholder funds.
“Additional Tier 1 (AT1) capital will not be eligible to meet the new requirements. Despite the capital increase, banks will still need to strictly comply with the Minimum Capital Adequacy Ratio (CAR) requirements applicable to licensing.
“As per the current regulations, banks that violate CAR requirements will be required to inject fresh capital to normalize their positions,” the circular said.
The CBN circular states that the proposed minimum capital requirement for banks will be paid-up capital, adding that the new minimum capital requirement will apply to all new banking license applications submitted on or after April 1, 2024. Ta.
The CBN said it will continue to process all pending applications for banking licenses for which capital deposits have been made and/or approval in principle (AIP) has been granted.
However, the promoters of such proposed banks said they would make up the difference between the capital deposited with the CBN and the new capital requirements by March 31, 2026.
Meanwhile, the CBN requires all banks to submit implementation plans (clearly setting out the various activities related to the options and timelines selected to meet the new capital requirements) by April 30, 2024 at the latest. said it was necessary. CBN also revealed that: You will monitor and ensure compliance with new requirements within specified timelines.
Source: guardian.ng