Nigeria’s banking sector could be on the verge of a massive capital-raising exercise as new proposals from the Central Bank of Nigeria (CBN) may compel some of the country’s biggest financial institutions to source nearly N972 billion in fresh equity. According to a report by Renaissance Capital Africa, the proposed framework could significantly reshape the capital structure of several bank holding companies, with Access Holdings expected to bear the largest burden.
The investment firm revealed that five major banking groups—Access Holdings, FCMB Group, First HoldCo, Guaranty Trust Holding Company (GTCO), and Stanbic IBTC Holdings—are likely to be affected if the draft guidelines are implemented without major adjustments. Access Holdings is projected to require a staggering N656.04 billion in additional capital, accounting for almost 68 percent of the total estimated shortfall. First HoldCo may need N135.03 billion, while FCMB could require N112.84 billion. GTCO and Stanbic IBTC are expected to raise N56.02 billion and N11.84 billion respectively.
Renaissance Capital noted that its projections are based on the assumption that the CBN will permit lenders to redeploy excess capital from subsidiaries that downgrade from international banking licences to national licences. This flexibility could help ease some of the pressure, provided affected subsidiaries retain sufficient capital to manage their operational risks. The report suggests that the move is aimed at strengthening the financial resilience of banking groups and ensuring adequate buffers against economic shocks.
For Access Holdings, the proposed changes would significantly improve its capital coverage ratio, which is expected to rise from 0.6 times under the current rules to 1.2 times after implementation. Similar improvements are projected for other lenders. First HoldCo’s coverage ratio, for instance, could increase from 0.9 times to 1.2 times, reflecting a stronger capital position despite the need for fresh fundraising. The report also indicates that some holding companies may experience a reduction in the aggregate paid-up capital of their subsidiaries under the new structure.
The potential requirement for nearly N1 trillion in fresh equity highlights the scale of regulatory reforms being considered by the apex bank and underscores the evolving landscape of Nigeria’s banking industry. While the proposed framework is designed to enhance financial stability and strengthen investor confidence, it could also trigger one of the largest capital mobilisation efforts in recent years as lenders position themselves to meet tougher regulatory standards and sustain future growth.
source: punch
