Nigeria: Banks given until June to submit recapitalisation plan

Mar 26, 2015

Some Nigerian banks do not meet the minimum Capital Adequacy Ratio under Basel II.

The Central Bank of Nigeria (CBN) has asked all systemically important financial institutions (SIFIs) that are still short of capital to submit recapitalisation plans by June 13, 2015.

The CBN identified eight Nigerian banks as SIFIs and imposed on them a new set of rules, requiring them to maintain a minimum Capital Adequacy Ratio of 16 per cent.

These are First Bank of Nigeria Limited, Zenith Bank Plc, Guaranty Trust Bank Plc, United Bank for Africa Plc, Access Bank, Ecobank Nigeria Plc, Diamond Bank Plc and Skye Bank Plc.

In a letter, it said some of these banks do not meet the minimum Capital Adequacy Ratio under Basel II of 10 per cent for regional and national banks, and 15 per cent for international banks, Vanguard reports.

The banks, whose names have not been disclosed, have been given until June 13, 2015 to submit recapitalisation plans and until June 30, 2016 to implement them.

The letter also affirms CBN's willingness to support any under-capitalised bank and that it may require rapid remedial actions if adequate capitalisation is not restored.

The CBN introduced Basel II and higher capital requirements for SIFIs in 2013 as part of tighter regulations to help bring about financial system stability and keep Nigerian lenders on a par with other banks across the globe.

International standards set by the Basel Committee demand that banks meet minimum capital requirements, measured as a percentage of their assets.ADNFCR-2976-ID-801781304-ADNFCR