The Central Bank of Nigeria (CBN) has indicated that deposit money banks may be required to raise additional capital if regulatory stress tests reveal capital shortfalls in their financial positions.
Nairametrics The directive forms part of the apex bank’s broader effort to strengthen the resilience of Nigeria’s banking system as the industry approaches the final phase of the ongoing recapitalisation programme.
The stress tests are designed to assess how banks would perform under severe economic scenarios such as a recession, financial market shocks, or sharp deterioration in asset quality.
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According to the CBN, banks will be required to disclose their capital adequacy ratios before and after the stress test exercise. Where the tests reveal a capital shortfall, the affected institutions must raise new capital to cover the gap.
The regulator stated that banks would need to raise either the full amount of the stressed capital shortfall or at least 50 percent of the amount calculated by the CBN, whichever is higher.
The capital raising must be completed within an 18-month period once the results of the stress tests are communicated to the banks. During this period, the required capital level identified through the exercise will become the institution’s risk-based capital requirement until the next stress-testing cycle.
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The stress tests are scheduled to begin as the banking sector reaches the closing phase of the CBN’s recapitalisation initiative, which requires banks to significantly increase their capital base by March 31, 2026.
The policy aims to produce stronger and more resilient financial institutions capable of supporting Nigeria’s long-term economic growth ambitions.
Industry data show that many banks have already raised fresh capital through rights issues, private placements, and public offers, with several institutions meeting the new minimum capital requirements ahead of the deadline.
Source: Nairametrics
