Recapitalization and Regulatory Shifts Reshape Nigerian Banking Sector in 2024

The Nigerian banking sector experienced a transformative 2024, driven by the Central Bank of Nigeria’s (CBN) recapitalization directive to support a $1 trillion economy. Banks were mandated to raise their capital thresholds, with international banks required to meet a N500 billion minimum. The recapitalization exercise, accompanied by regulatory interventions such as board dissolutions and license revocations, prompted mergers, equity issuances, and a wave of fundraising, resulting in N1.7 trillion raised by year-end. However, delays in share verification processes and stricter oversight posed challenges for smaller banks, intensifying market concentration and prompting concerns about job losses and mergers.

Despite these challenges, Nigerian banks posted record profits in 2024, with six major lenders reporting a combined profit before tax of N4.15 trillion in the first nine months, more than doubling the previous year’s figures. This profitability surge was largely attributed to rising monetary policy rates aimed at curbing inflation. Regulatory actions under new CBN leadership included high-profile board reshuffles, the revocation of Heritage Bank’s license, and the introduction of a windfall tax on banks’ foreign exchange transaction profits, reflecting a stricter governance era for the sector.

Looking ahead to 2025, analysts predict continued sector consolidation, driven by the recapitalisation exercise and smaller banks’ struggles to meet capital thresholds. While these reforms are expected to create a more robust banking system, they could also lead to job losses and industry shifts reminiscent of the 2005 reforms. The banking sector’s performance will remain pivotal for Nigeria’s broader economic growth, influencing financial inclusion, credit access, and diversification beyond oil dependency.