A Pricewatercooper (PwC) report has said that the Central Bank of Nigeria (CBN) recapitalisation for banks will boost the nation’s economy and improve its financial credibility.
The apex bank announced a two-year bank recapitalisation process which began on April 1 and is expected to end on March 31, 2026.
The plan requires a minimum capital of N500 billion, N200 billion, and N50 billion for Commercial Banks with International, National, and Regional licenses respectively.
Likewise, the CBN also raised the capitalisation baseline for Merchant Banks (N50 billion) and Non-interest Banks (National: N20 billion and Regional: N10 billion).
Ahead of Tuesday’s deadline for the submission of recapitalisation plans by banks approaches, the multinational professional services and tax audit company listed these strategic options in its latest publication titled: ‘Recapitalisation response pathways: Thinking outside the box’ released on Wednesday.
The report, which was authored by PwC Nigeria’s Partner & Financial Services Industry Leader, Chidi Ojechi; Partner, Deals Advisory, Kunle Amida; Partner | West Africa Strategy & Leader, Olusegun Zaccheaus, said the case for recapitalisation was premised on the economic growth and improved financial stability that this change was envisioned to bring about.
It listed economic growth, financial stability, growth in Foreign Direct Investment (FDI) financial development, and international competitiveness and reputation as some of the obvious implications of recapitalisation
The report said, for instance, that “Recapitalisation has been linked with higher economic growth through a more robust lending mechanism. It could also boost the credit/GDP ratio from 14.3 per cent (as of 2022), which is low compared to sub-Saharan Africa (SSA), 35.8 per cent, and the UK rate at 130 per cent.”
According to PwC Nigeria, recapitalisation is expected to result in a more stable financial system that is less susceptible to losses, allowing D-SIBs to maintain a minimum Capital Adequacy Ratio (CAR) of 15 per cent, and other banks a minimum CAR of 10 per cent.
It also said recapitalisation is expected to attract significant FDI, as the industry looks to raise funds to meet the new recapitalisation requirements. “The strengthened industry position will boost capital markets,” it stated.
