Central Bank of Nigeria (CBN) has reportedly granted Union Bank of Nigeria, Polaris Bank and Keystone Bank additional time to complete their recapitalisation process following the expiration of the March 31 deadline set for all banks.
CBN
Sources familiar with the development said the apex bank approved a three-week regulatory window to enable the three institutions, currently under intervention management, to conclude outstanding aspects of their recapitalisation plans.
The sources indicated that the decision was informed by the unique legal and regulatory challenges facing the banks, particularly issues relating to ownership disputes and ongoing judicial proceedings.
Under the CBN’s recapitalisation programme, commercial banks with national licences are required to maintain a minimum share capital and share premium of N200 billion, while those with international authorisation are expected to have N500 billion. Banks operating with regional licences are required to maintain a minimum capital base of N50 billion.
The three banks are estimated to require at least N350 billion collectively to retain their national banking licences under the new capital framework.
Industry sources said the institutions were exploring several options, including fresh capital injections from investors, licence restructuring and possible mergers or acquisitions, although they were reportedly inclined towards standalone recapitalisation strategies.
The banks also have the option of downgrading their operations to regional banking licences, which require a lower capital threshold.
The CBN had, in January 2024, dissolved the boards and management of Union Bank, Polaris Bank and Keystone Bank, citing infractions related to regulatory non-compliance, corporate governance failures and violations of conditions attached to their operating licences.
According to the apex bank, the affected institutions were found to have engaged in activities that posed risks to financial stability, contrary to provisions of the Banks and Other Financial Institutions Act (BOFIA) 2020.
Legal disputes have since complicated the ownership structure of some of the banks. In the case of Union Bank, former shareholders recently secured a judgment at the Federal High Court voiding the bank’s takeover by the CBN. The apex bank has appealed the ruling.
At the conclusion of the banking recapitalisation exercise on March 31, the CBN announced that 33 banks successfully met the revised minimum capital requirements.
The apex bank disclosed that Nigerian banks raised about N4.65 trillion in fresh capital during the 24-month exercise, with 72.55 per cent sourced from domestic investors and 27.45 per cent from international markets.
The CBN described the outcome as a significant boost to the resilience of the banking sector and its capacity to support economic growth.
In a statement issued after the exercise, the apex bank noted that a limited number of institutions remained subject to ongoing regulatory and judicial processes, which were being addressed through established supervisory and legal frameworks.
CBN Governor, Olayemi Cardoso, had previously assured depositors and stakeholders that the three banks remained fully operational and that measures were being taken to resolve all outstanding issues.
He said the apex bank would continue to support efforts by the affected institutions to address their legal and regulatory challenges while safeguarding financial system stability.
