Banks Bolster Capital Buffers as CBN Steps Up Regulatory Oversight

Deposit money banks are reinforcing their capital positions as the Central Bank of Nigeria tightens regulatory oversight, deepening its focus on governance, transparency and risk management to safeguard financial system stability.

The CBN Governor, Olayemi Cardoso, has said Nigeria’s banking system remains stable and resilient but noted that the regulator is staying alert to emerging risks, including cyber threats, credit concentration and operational weaknesses. According to him, these risks are being addressed through enhanced risk-based supervision and the transition to Basel III, which is expected to strengthen capital quality, boost resilience and improve liquidity monitoring as recapitalisation progresses.

Members of the Monetary Policy Committee have also affirmed the soundness of the banking sector. At the 303rd MPC meeting in Abuja, the committee expressed satisfaction with the sector’s performance, noting that key financial soundness indicators remain within regulatory thresholds. They acknowledged notable progress in the recapitalisation programme, with 16 banks already meeting the revised capital requirements, and urged the apex bank to ensure the process is completed successfully.

With fewer than four months to the end of the exercise, Cardoso confirmed that recapitalisation remains on track. Speaking at the recent Bankers’ Dinner in Lagos, he said several banks have already crossed the new capital thresholds, while others are making steady progress toward the 31 March 2026 deadline.

“So far, 27 banks have raised capital through public offers and rights issues, and 16 have already met or exceeded the new requirements,” he said, describing this as evidence of the depth and resilience of Nigeria’s banking industry. He added that recent stress tests show the system remains fundamentally strong, with most prudential indicators meeting regulatory benchmarks.

As part of efforts to protect the estimated N4.14tn being raised through recapitalisation, the CBN is overhauling the sector’s credit-risk framework. Cardoso said the apex bank is enforcing stricter governance, transparency and accountability standards to ensure the new capital is properly managed and to prevent a repeat of boom-and-bust cycles seen after past recapitalisation exercises.

He explained that a newly established Compliance Department, now fully operational, is strengthening oversight in areas such as financial crime supervision, market conduct, enterprise security, corporate governance and environmental, social and governance issues. In addition, the CBN’s Credit Risk Management System has been upgraded to a web-enabled platform, allowing banks to conduct borrower checks and submit statutory returns more efficiently, with plans underway to integrate it into banks’ internal systems.

A Deloitte report estimates that Nigerian banks will raise about N4.14tn by March 2026, noting that higher minimum capital requirements—ranging from N50bn to N500bn depending on licence type—are necessary to address inflation, high interest rates, exchange rate volatility and external shocks. The report said stronger capital buffers would enhance banks’ ability to absorb losses and support larger transactions.

Cardoso reiterated that while the system is sound, vigilance remains essential. He added that the Basel III transition will further reinforce resilience, while operational discipline is being strengthened to improve efficiency across the financial system. Measures taken include a comprehensive review of the cash lifecycle, revised cash-printing models, tighter controls on ATM and branch closures, sanctions for cash-dispensing failures, and enhanced supervision of point-of-sale operators nationwide.

These interventions align with the Federal Government’s ambition to grow Nigeria’s economy to $1tn by 2030. Cardoso stressed that a well-capitalised banking sector is critical to achieving this goal, warning that without decisive action, banks may lack the capacity to support such an expansion. The ongoing recapitalisation, he said, will position banks to finance growth, attract larger transactions and support economic development.

The CBN has reassured depositors and the public that the sector remains secure, emphasising that it continues to monitor all financial institutions under robust early-warning and risk-based supervision frameworks.

The recapitalisation programme, announced in March 2024, raised minimum capital requirements for banks based on licence categories, with full compliance expected by March 2026. Cardoso said the policy would promote inclusive growth by enabling banks to extend more credit to MSMEs and invest in technology and innovation, expanding digital financial services and access nationwide.

He added that key indicators such as non-performing loan and liquidity ratios remain within regulatory limits, while stress tests continue to affirm the system’s overall strength. Industry leaders have also described the recapitalisation drive as timely, saying it will help banks withstand economic shocks and finance large-scale infrastructure and industrial projects.

Under the CBN Act of 2007, the apex bank is mandated to promote financial system stability, a responsibility it continues to pursue through reforms, stronger governance standards and enhanced supervisory frameworks aimed at sustaining confidence in the banking system and supporting long-term economic growth.