CBN says capital buffer is a starting point of recapitalisation reform, not the end

The Central Bank of Nigeria (CBN) has said stronger capital buffers are only the starting point of banking sector recapitalisation, with the next phase requiring stronger governance, risk management and productive lending.

The apex bank made this known at its 38th Seminar for Finance Correspondents and Business Editors in Abuja, themed “Towards a Robust and Resilient Financial System in the Post-Banking Sector Recapitalisation Era.”

Speaking at the event, CBN Deputy Governor, Corporate Services, Dr. Muhammad Sani Abdullahi, said 33 banks had met the revised minimum capital requirements by the end of the two-year programme announced in March 2024, collectively raising N4.65 trillion.

• “Capital, however, is a starting point. Boards and management must maintain sound controls, recognise risks early and lend on the strength of viable projects,” Abdullahi said.

He added that banks with risky capital exposure could be required to raise more capital out of necessity to strengthen their balance sheets.

Capital raise must support productive lending:

The CBN said the success of the recapitalisation programme should not be judged solely by the amount of capital raised. Instead, attention should shift to the quality of banking services and economic activity supported by the stronger capital base.

Abdullahi said Nigeria’s ambition to build a $1 trillion economy by 2030 requires banks capable of mobilising and allocating capital on a much larger scale.

• “We should assess recapitalisation by the quality of banking services and productive lending it supports, as well as by the amount of capital raised,” Abdullahi said.
• “Stronger capital buffers should enable banks to finance long-term infrastructure, support industrial expansion, facilitate international trade and compete more effectively in regional and global markets,” he added.

He said stronger bank balance sheets should also translate into wider access and better services for rural communities, women and young entrepreneurs, while supporting agriculture, manufacturing, services and infrastructure.

Governance becomes next banking test:

The apex bank said stronger balance sheets could still be undermined by poor governance and excessive risk-taking. Abdullahi said boards and management teams must therefore strengthen internal controls, improve accountability, and recognise emerging risks early.

The CBN also indicated that its supervisory focus would extend beyond traditional credit exposures to risks arising from the increasingly digital and interconnected financial system.

• “Sound corporate governance must underpin that work. Boards and management teams must demonstrate integrity, accountability and transparency, strengthen internal controls and guard against excessive risk-taking,” Abdullahi said.
• “Risk management must extend beyond credit risk to market, liquidity and operational risks, as well as cybersecurity, third-party dependencies and climate-related financial risks,” he added.
• “A stronger balance sheet must be matched by stronger management of risk.”

The CBN said it would continue to monitor governance, asset quality, liquidity and large exposures, while emphasising risk-based supervision, macroprudential surveillance and enhanced stress testing.

FX rate gap falls below 2%:

The recapitalisation programme comes alongside broader reforms in Nigeria’s monetary and foreign exchange markets. Abdullahi said the FX market had become more stable three years into the reform programme, while external buffers had strengthened.

• The Deputy Governor also pointed to stronger autonomous FX inflows and moderating inflation as evidence of changes in the wider macroeconomic environment.
• The average gap between official and parallel FX rates fell from 68.2% between January and May 2023 to less than 2%.
• Total FX inflows reached $10.82 billion in July 2026, with autonomous sources accounting for $7.33 billion, or nearly 68%.
• Net foreign portfolio inflows reached $6.31 billion between January and August 2026, while gross external reserves stood at $55.60 billion as of September 11.

Headline inflation moderated to 15.43% in July 2026, while real GDP expanded by 4.43% in the second quarter.

Abdullahi, however, acknowledged that the improved indicators did not mean the pressure facing households and businesses had ended, stressing the need to make the gains more durable.

CBN shifts focus beyond capital:

The end of the two-year recapitalisation programme marks a shift in what the CBN expects from banks that have met the revised requirements. The focus is increasingly on how stronger balance sheets are managed and deployed rather than solely on the amount of capital raised.

• The apex bank expects banks to use their expanded capacity to support productive activity while maintaining resilience against conventional and emerging financial risks.
• Thirty-three banks met the revised minimum capital requirements and collectively raised N4.65 trillion.
• The CBN expects stronger capital buffers to improve banks’ ability to absorb losses during periods of economic stress.
• Banks will face continued scrutiny over governance, asset quality, liquidity, large exposures, cybersecurity, and operational resilience.

Consumer protection, financial inclusion, fintech regulation, crisis preparedness and resolution planning will remain part of the CBN’s supervisory priorities.

The post-recapitalisation phase will therefore centre on whether the stronger capital positions translate into productive lending, improved banking services and greater resilience across Nigeria’s financial system.