CBN verifying 13 banks’ funds as recapitalisation deadline month begins

As the final month of the banking sector recapitalisation exercise begins, the Central Bank of Nigeria (CBN) is intensifying verification of fresh capital raised by lenders, with about 13 banks’ funds currently undergoing scrutiny ahead of the March 31 deadline.

The verification process, regulators say, is the last critical hurdle before new equity can be formally approved and added to banks’ capital bases, marking the conclusion of one of the most ambitious financial sector reforms in recent history.

By month-end, the two-year recapitalisation window announced in 2023 will officially close. Not less than N5 trillion is expected to have been raised across the industry when the exercise concludes, with about N4.05 trillion already secured by 20 banks, according to industry data. The scale of capital mobilisation underscores the magnitude of the reform and signals a structural shift in Nigeria’s banking landscape.

Under the leadership of Olayemi Cardoso, governor of the Central Bank, the recapitalisation drive is designed to create stronger, more sophisticated banks capable of funding big-ticket transactions and supporting the Federal Government’s ambition of building a $1 trillion economy. Beyond meeting regulatory thresholds, the initiative aims to reshape the banking system into a more resilient engine of growth, capable of financing infrastructure, supporting industrial expansion and deepening financial intermediation.

Cardoso, in his most recent public update, confirmed that 20 banks have already met the new capital requirements, while others are in advanced stages of compliance. However, raising funds is only part of the process. Under the recapitalisation guidelines, newly raised equity must undergo capital verification before regulators clear the allotment proposal and release the funds for final completion of the offer process and addition to the bank’s capital base.

The CBN serves as the final signatory in a tripartite capital verification committee that also includes the Securities and Exchange Commission and the Nigeria Deposit Insurance Corporation. The committee is tasked with scrutinising the source, authenticity and compliance status of all new funds raised under the programme. Industry sources indicate that many of the banks classified as being at an advanced stage have already lodged their funds with the CBN, with verification now the primary step remaining.

Read also: What stronger banking sector means for Nigeria’s growth trajectory

Ayokunle Olubunmi, head of Financial Institutions Ratings at Agusto & Co, said a significant number of banks that the CBN described as advanced in the process have effectively completed capital raising. “You’ll be shocked that a lot of those that the CBN said are at an advanced stage, some of them already have the funds with the CBN. What the CBN is doing is verifying those funds. So, it’s not that they are still going to the markets looking for the funds. The bulk of them have actually raised the funds,” he said.

Cardoso has repeatedly emphasised that the recapitalisation exercise is not merely about higher numbers on balance sheets, but about strengthening risk management frameworks, entrenching a culture of compliance and aligning the financial system with Nigeria’s long-term growth objectives. According to him, sustainable economic growth requires strong institutional backing from a sound and resilient banking system.

He has maintained that Nigeria’s banking sector remains fundamentally sound, with key financial soundness indicators comfortably within prudential benchmarks. The non-performing loan ratio remains within the regulatory ceiling of five percent, reflecting strong credit risk management, while the liquidity ratio exceeds the mandatory 30 percent floor, ensuring that banks maintain adequate cash flow to meet obligations. Recent stress tests conducted by the apex bank, he added, reaffirmed the sector’s resilience even under adverse scenarios.

Still, the CBN governor has warned that vigilance is critical. Emerging risks, including cyber threats, credit concentration pressures and operational vulnerabilities require strengthened risk-based supervision and continued transition toward Basel III standards. The shift to Basel III, he noted, will improve capital quality, strengthen liquidity monitoring and further bolster systemic resilience.

Beyond capital buffers, the Cardoso-led CBN has undertaken broader reforms aimed at restoring discipline and transparency in financial markets. At a recent engagement with bankers, he stressed that ethics and professionalism in the industry are under constant scrutiny. The apex bank has intensified surveillance of market activities, insisting on strict compliance with regulations and adopting a zero-tolerance approach toward violations.

A notable measure in this regard is the introduction of the FX Global Code for authorised dealers and market participants, designed to promote transparency, accountability and ethical conduct in the foreign exchange market. Cardoso has called on the Chartered Institute of Bankers of Nigeria to lead in upholding the highest professional standards across the industry.

The recapitalisation programme is also being viewed internationally as a strategic reset. Matthew Verghis, Country director of the World Bank in Nigeria, said stronger banks create the foundation for financing Nigeria’s long-term ambitions from empowering micro, small and medium enterprises to unlocking large-scale infrastructure development. According to him, the opportunity lies in converting stronger balance sheets into deeper financial intermediation, greater resilience and inclusive growth.

At the bank level, industry leaders have echoed the importance of the reform. Oliver Alawuba, Group managing director of United Bank for Africa, described the recapitalisation as both timely and essential in positioning the financial system to meet the demands of a growing and globally competitive economy. He said stronger capital buffers will enhance banks’ ability to withstand economic shocks such as inflation, currency volatility and geopolitical disruptions, while enabling them to fund large-scale infrastructure and industrial projects.

Alawuba stressed that recapitalisation goes beyond regulatory compliance and is a forward-looking strategy aimed at equipping Nigerian banks to operate at the scale required by a trillion-dollar economy. The move, he said, strengthens the sector’s capacity to finance traditional sectors such as oil and gas, agriculture and manufacturing, as well as emerging areas including fintech, green energy and infrastructure.

Tunde Lemo, former deputy governor of the CBN said banks that have yet to meet the new capital threshold are likely considering mergers and acquisitions as a pathway to compliance, a move he believes the regulator will encourage. He added that the Central Bank is closely monitoring developments and will ensure that no depositor loses funds in the process, stressing that the protection of depositors remains paramount.

Drawing lessons from the 2005–2006 banking consolidation, Lemo noted that the exercise was completed without collateral damage and expressed confidence that regulators are now even better equipped to manage the transition. According to him, the authorities can build on past experience, apply improved strategies and guide the sector through the recapitalisation successfully, maintaining that there is no cause for alarm.

The recapitalisation programme, launched in early 2024 as part of wider financial sector reforms, is aimed at ensuring banks are sufficiently capitalised to withstand shocks, deepen credit intermediation and support long-term economic expansion, including President Bola Tinubu’s ambition to grow Nigeria into a $1 trillion economy.

Abiodun Adedipe, economist and Founder of B. Adedipe Associates Limited, situated the recapitalisation within a broader reform agenda. He cited foreign exchange market reforms, subsidy removal, fiscal consolidation and tax reforms as complementary measures lifting the economy. According to him, stronger and better-capitalised banks are critical to funding Nigeria’s long-term ambitions, particularly in an economy supported by a young and rapidly growing population, rising urbanisation and increasing digital penetration.

The CBN has consistently underscored that monetary reform cannot succeed in isolation. Coordination with fiscal authorities has helped strengthen macroeconomic stability, reduce domestic borrowing pressures and improve predictability in public finance management. A key policy decision, Cardoso emphasised, is the discontinuation of direct deficit financing by the central bank, signalling a firm commitment to discipline and a departure from past practices.

As Nigeria transitions toward a full-fledged inflation-targeting framework, deeper fiscal-monetary alignment is expected to reinforce price stability and macroeconomic resilience. The recapitalisation of banks stands at the centre of this recalibration, serving as both a shield against shocks and a platform for growth.

With weeks to the March 31 deadline, attention remains firmly on the CBN’s verification desks, where scrutiny of fresh capital will determine the final list of compliant institutions. Once concluded, the reform will not merely close a regulatory chapter, but mark the emergence of a more robust banking system, one designed to finance Nigeria’s development ambitions for decades to come.