Nigeria’s Tier-2 Banks Face Intensifying Pressure Ahead of CBN Recapitalisation Deadline
By Joseph Iyaji | Akahi News
Pressure on Nigeria’s Tier-2 banks is mounting as the Central Bank of Nigeria’s (CBN) March 2026 recapitalisation deadline draws near. New research by SBM Intelligence suggests that a significant number of mid-tier banks could become part of a fresh wave of mergers and acquisitions.
In 2024, the CBN directed all commercial banks to raise their minimum paid-up capital to N500 billion for international banks, N200 billion for national banks, and N50 billion for regional banks. According to SBM Intelligence’s latest report, “Capital, Competition, and Consolidation,” these measures are “not merely a compliance exercise but a strategic imperative to fortify the sector’s capacity to withstand macroeconomic shocks, support Nigeria’s ambition for a $1 trillion economy, and restore global investor confidence.”
While Tier-1 banks such as Zenith, Access, and FBN Holdings remain dominant with robust balance sheets and record profits, mid-tier banks are increasingly under pressure to scale up. SBM noted that “for Tier-2 banks, these developments present both a challenge and an opportunity. While some have made early strides in capital raising, many face the stark reality of needing to scale up rapidly or risk being subsumed in a wave of industry consolidation.”
The report highlighted that successful navigation of regulatory headwinds, adoption of technology, and bold capital strategies will be critical for mid-tier banks aiming to secure their place in the evolving financial landscape. Mergers and strategic alliances are expected to become more prevalent, creating larger, more competitive institutions, though potential risks such as marginalising smaller players and integration challenges remain.
Several banks have already made notable progress. Fidelity Bank raised over N270 billion through public offers and rights issues oversubscribed by 238% and 138%, respectively, positioning itself to surpass the N500 billion threshold in its next phase of capital raising. FCMB Group adopted a phased approach targeting N400 billion, which included a public offer of N144.6 billion, divestments of subsidiaries such as Credit Direct and FCMB Pensions, and private placements with offshore investors.
Wema Bank has pursued a two-tranche programme combining rights issues and private placements worth N200 billion, while Sterling Financial Holdings seeks $400 million through private placements and a planned public offering.
Despite these efforts, SBM Intelligence cautioned that the recapitalisation process carries significant risks. “The prospect of such consolidation raises critical questions about the future structure of the sector, the competitive dynamics between banks, and the implications for customers, employees, and the broader economy,” the report stated. Challenges cited include high funding costs, shrinking non-interest income, and the risk of loan defaults in a high-interest-rate environment, leaving banks with the dual burden of expanding their asset base while keeping non-performing loans under regulatory limits.
The coming months are expected to reshape Nigeria’s banking landscape, with mid-tier banks at a crossroads between consolidation and survival.
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