Nigeria’s banking sector could be heading for another major capital-raising exercise as Renaissance Capital (RenCap) has warned that the Central Bank of Nigeria’s (CBN) proposed Financial Holding Company (HoldCo) framework may require banks to raise more than N1.7 trillion in additional capital. The investment bank said the proposal, which would require holding companies to maintain capital equal to 120% of their subsidiaries’ paid-up capital, could significantly reduce shareholder value and place fresh pressure on the industry at a time when profitability is already slowing.
In its report titled “Nigerian Banks: More Capital, Declining Returns,” released on July 16, 2026, RenCap described the proposed 20% capital buffer as the most consequential aspect of the new framework. According to the firm, holding companies are non-operating entities that generate little or no returns, making the requirement potentially costly for investors. RenCap argued that the current requirement, which mandates HoldCos to maintain capital equal to the combined capital of their subsidiaries, is already sufficient to support financial stability and act as a safety net when needed.
The report estimates that several banking groups would need significant capital injections if the framework is implemented. Access Holdings is expected to face the largest funding gap at N656.04 billion, followed by UBA with N416.01 billion, Fidelity Bank with N188.83 billion, Zenith Bank with N166.88 billion, First HoldCo with N135.03 billion, and FCMB Group with N112.84 billion. RenCap noted that Access Holdings could be the hardest hit, as the amount required represents nearly half of its current market value, while UBA’s projected requirement would account for more than 23% of its market capitalization.
Beyond raising fresh capital, the proposed guidelines could also trigger a major restructuring of banking groups. The CBN plans to require foreign subsidiaries to be owned directly by holding companies rather than operating banks, a move that would affect institutions with international operations. The regulator said the review is necessary to address governance weaknesses, compliance gaps, and operational inefficiencies identified since the HoldCo framework was first introduced in 2014 following the end of universal banking.
RenCap further warned that the reforms may arrive at a challenging time for the industry. The average Return on Average Equity (ROAE) for Nigerian banks has already fallen to 20.63% in 2025 from peak levels above 31% recorded in 2023 and 2024. The firm believes that forcing banks to raise additional equity while earnings are moderating could further dilute returns and dampen investor confidence. To minimize the impact, RenCap urged the CBN to remove the proposed 20% buffer, allow banks to redeploy excess capital from licence downgrades, and provide greater clarity on capital adequacy requirements. The warning comes amid growing concerns from shareholders, who have also called on the apex bank to review the proposal to avoid investor fatigue and preserve confidence in Nigeria’s banking sector.
source: nairametrics
