CBN Recapitalisation Sparks N500bn Surge in Bank Stocks on NGX

Investor activity in Nigeria’s stock market soared last week, especially within the banking sector, following the Central Bank of Nigeria’s (CBN) recapitalisation directive. This resulted in an impressive N500.76 billion turnover on the Nigerian Exchange (NGX), the highest in months. The CBN’s new capital requirements—N500 billion for international banks, N200 billion for national banks, and N50 billion for regional banks—have ignited a scramble among financial institutions to strengthen their capital bases, prompting massive investor interest.

Banks perceived to have solid capital-raising strategies, especially tier-1 players, are now investor favourites. United Bank for Africa (UBA), which launched a N157 billion rights issue, hit a record high share price of N46.05. Trading activity was also dominated by FCMB, Accesscorp, and Zenith Bank. The NGX Banking Index climbed by 5.4% in the week, outpacing the All-Share Index’s 4.3% growth and lifting year-to-date returns to 27.8%.

Market experts note that investor sentiment is a blend of confidence and strategic speculation, with many betting on banks likely to emerge as winners in the recapitalisation process. Analysts expect further corporate actions such as mergers and acquisitions, especially among smaller banks trying to avoid losing investor confidence or regulatory licenses. Major block trades, like those from FBN Holdings and Fidelity Bank, also indicate a shift in shareholder dynamics and potential industry consolidation.

The recapitalisation effort is also seen as a tool for broader economic impact. A better-capitalised banking system, according to the CBN, will be crucial in funding large-scale infrastructure and industrial projects that support Nigeria’s push toward a $1 trillion economy. Investors are drawn not just by strong fundamentals but also by the long-term potential of a more stable and capable financial system.

Despite the current bullish mood, analysts caution that challenges lie ahead. Mid-tier and regional banks with no clear recapitalisation paths could face forced mergers or license downgrades. Market volatility may increase as weaker institutions announce restructuring plans. Still, for now, the sentiment remains optimistic, and banking stocks are the clear favourites in Nigeria’s capital markets, with more revaluation expected as the March 2026 deadline approaches.

Source: The Sun