With Nigeria’s banking recapitalisation exercise now concluded, attention is shifting from how much capital was raised to how well it will be protected.
At the centre of this transition is the Central Bank of Nigeria (CBN), which is quietly redrawing the rules that will determine whether the newly injected N4.65tn strengthens the financial system or exposes it to familiar risks.
The regulator’s latest move a comprehensive redesign of the banking sector’s credit-risk framework signals a decisive shift in focus. After two years of capital mobilisation by 33 banks, the next phase is no longer about accumulation, but discipline.
For the CBN, the stakes are clear. Fresh capital, if poorly managed, can quickly become a liability. Across the industry, there is a shared recognition that recapitalisation alone does not guarantee stability. Without strict risk management and regulatory oversight, banks may be tempted to channel new funds into aggressive lending, potentially recreating the very vulnerabilities the exercise was meant to resolve.
That concern is not theoretical. Nigeria’s banking history offers a cautionary tale. Following the 2005 recapitalisation, increased liquidity triggered a wave of high-risk lending, with weak adherence to credit controls. The result was a cycle of expansion and distress that ultimately required regulatory intervention.
Determined not to repeat that pattern, the CBN is moving to embed stronger governance structures into the system. Its redesigned credit-risk framework is expected to enforce stricter oversight, deepen transparency, and hold financial institutions more accountable for how capital is deployed.
This marks a subtle but important shift from reactive regulation to proactive risk containment.
Regulatory data continues to show that Nigeria’s banking sector remains broadly sound and resilient, with improved capacity to finance large-scale transactions. But resilience, in this context, is no longer defined solely by capital size. Increasingly, it is about how that capital behaves under pressure.
In practical terms, the new framework aims to ensure that lending decisions are anchored in robust risk assessment, rather than short-term profit incentives. It also seeks to align banks more closely with global standards on capital adequacy and risk management.
For stakeholders, the message is straightforward: the real test of recapitalisation begins now. As the system transitions into this new phase, the emphasis will be on sustainability ensuring that capital is not just available, but durable. The CBN’s strategy reflects a broader ambition to break the long-standing boom-and-bust cycle that has characterised past reforms.
In that effort, credit discipline has become the frontline.
What emerges in the months ahead will determine whether Nigeria’s banking sector can translate record capital inflows into long-term stability—or whether old habits will erode new gains.
Speaking during a forum in Lagos, CBN Governor, Olayemi Cardoso, said the apex bank will be enforcing stronger governance, greater transparency, and firmer accountability to protect new capital raised by banks.
How The Funds Were Raised
At the end of the two-year recapitalisation project, the CBN confirmed that 33 banks raised combined N4.65tn.
In a statement, jointly signed by CBN Director, Banking Supervision Department, Olubukola Akinwunmi, and Acting Director, Corporate Communications Department, Mrs. Hakama Sidi Ali, described the exercise as successful, adding that 33 banks met the revised minimum capital requirements established under the programme.
They said, “Over the 24-month period, Nigerian banks raised a total of N4.65tn in new capital, strengthening the resilience of the financial system and enhancing its capacity to support the economy. The programme recorded strong participation from both domestic and international investors, with 72.55 per cent of capital sourced locally and 27.45 per cent from international markets, reflecting sustained confidence in the Nigerian banking sector”.
The CBN Governor Olayemi Cardoso commented, “The recapitalisation programme has strengthened the capital base of Nigerian banks, reinforcing the resilience of the financial system and ensuring it is well-positioned to support economic growth and withstand domestic and external shocks.”
Continuing, Cardoso said Nigeria’s banking system remains fundamentally sound and resilient, a cornerstone of our financial stability.
“At the same time, we remain vigilant to emerging risks, including cyber threats, credit-concentration pressures, and operational vulnerabilities. These are being addressed through strengthened risk-based supervision and our ongoing transition to Basel III, which will further bolster resilience, improve capital quality, and strengthen liquidity monitoring,” he said.
The CBN boss disclosed that with just four months to the conclusion of the recapitalisation exercise, the process remains firmly on track.
“As we strengthen the capacity of our banks, stress-testing this year confirms that Nigeria’s banking sector remains fundamentally robust. Key financial soundness indicators overwhelmingly satisfied prudential benchmarks during the year,” Cardoso added.
He said the apex bank is reinforcing operational discipline to ensure the financial system serves all Nigerians reliably.
“Our starting point was a comprehensive, end‑to‑end review of the entire cash lifecycle: from production, to transportation, to distribution, and eventual access by consumers. This holistic assessment enabled us to address root causes rather than symptoms.”
“As a result, we recalibrated our cash‑printing models, issued guidelines on the optimal ATM‑to‑card ratio, strengthened requirements for CBN approval before ATM or branch closures, enforced sanctions on banks whose ATMs fail to dispense cash, and intensified supervision of payment agents and POS operators nationwide,” he said.
The CBN said a limited number of institutions remain subject to ongoing regulatory and judicial processes, which are being addressed through established supervisory and legal frameworks. All banks remain fully operational, ensuring continued access to banking services for customers.
The programme has strengthened capital adequacy ratios (CAR), with the sector maintaining levels above international Basel benchmarks. Minimum CAR thresholds remain at 10 per cent for regional and national banks and 15 per cent for banks with international authorization. The recapitalisation, implemented alongside an orderly exit from regulatory forbearance, has improved asset quality, reinforcing balance sheet transparency and overall financial system stability.
According to the CBN, to safeguard these gains, the CBN has strengthened its risk-based capital adequacy framework, requiring banks to conduct regular stress testing across defined scenarios and maintain appropriate capital buffers.
Key regulatory measures, including prudential guidelines and the supervisory framework, are subject to periodic review to support ongoing strengthening of governance, risk management, and sector resilience.
“The recapitalisation programme was carried out without disruption to banking services, ensuring continuous access for individuals and businesses throughout the process. The successful completion of the programme establishes a stronger and more resilient banking system, better positioned to support lending, mobilise savings, and withstand domestic and global shocks,” the bank said.
The apex bank reiterated its commitment to a stable, transparent, and resilient financial system that inspires confidence among depositors, investors, and the broader public, and to advancing the sustainability of the nation’s financial architecture.
The CBN, Cardoso said, has equally established a dedicated Compliance Department, now fully operational, with mandates covering financial crime supervision, market conduct, enterprise security, corporate governance, and Environmental, social, and governance (ESG).
According to the CBN boss, the process enforcing stronger controls on raised funds is ongoing with the redesigning of the credit‑risk framework expected to ensure that raised funds are well managed by financial institutions.
Previously, banks were awash with post recapitalisation funds, with analysts predicting that without proper risk management policies and regulatory controls, chances of misapplying such raised funds through risky loans remain high.
To guard against such occurrence, Cardoso stated, “As recapitalisation progresses, we are redesigning the credit‑risk framework to enforce stronger governance, greater transparency, and firmer accountability across the sector. We are determined to break the boom‑and‑bust cycle that has accompanied past recapitalisation efforts.”
Already, the CBN Credit Risk Management System (CRMS) is web-enabled, allowing banks and other stakeholders to dial directly into the CRMS database to render statutory returns or conduct status enquiry on borrowers. Also, the CBN is in the process of integrating the CRMS with other systems operating in the banks to make it more efficient.
In a report titled: “Nigeria’s macro headwinds trigger bank recapitalisation” Deloitte, a global accounting and audit firm, said the upward review of banks’ capital base from N50bn to N500bn depending on the type of licence held by the bank, remains an essential action required to boost capital adequacy needs of the Nigerian financial industry.
