Bank Stocks Decline As CBN Recapitalisation Window Closes

… Investors Cautios Despite Improved Capital Inflows, Policy Reform

Shares of several Nigerian banks declined on the Nigerian Exchange (NGX) on Monday as investors reacted to the looming expiration of the Central Bank of Nigeria’s two-year recapitalisation window for deposit money banks, set to close today, March 31.

Data from the NGX, tracked by THE WHISTLER, showed that six of the twelve most actively quoted banks, including Zenith Bank Plc, Access Holdings Plc, Fidelity Bank Plc, Guaranty Trust Bank Plc, Sterling Bank Holdings, and Wema Bank Plc, recorded decreases in share prices.

Meanwhile, three banks, United Bank for Africa Plc, First Bank Holdings Plc, and FCMB Group Plc, posted gains, while three others, including Ecobank Nigeria Plc, Unity Bank Plc, and Stanbic IBTC Holdings Plc, closed flat.

The NGX Banking Index, which tracks the performance of listed banks, fell by 15.15 points, or 0.82 per cent, to close at 1,894.02 points, down from 1,909.57 at the start of trading.

Overall market capitalisation also declined by N276bn, or 0.21 per cent, to N128.69trn from N128.97trn recorded in the previous session. Similarly, the NGX All-Share Index dropped 0.21 per cent to close at 200,484.43 points.

The CBN’s recapitalisation directive, introduced in 2024, requires commercial banks with international authorisation to raise their capital base to N500bn, while national banks must reach N200bn and regional banks N50bn. The initiative is aimed at strengthening the resilience of the Nigerian banking sector and enhancing financial stability.

According to data released ahead of the deadline, about 32 banks have successfully met the new capital thresholds through rights issues, public offerings, private placements, and strategic mergers. The exercise has attracted a total of N4.61trn in new capital into the sector, according to CBN Governor Olayemi Cardoso.

Three banks, Polaris Bank, Keystone Bank, and Union Bank of Nigeria Plc, remain under close regulatory review due to structural and legal challenges, and may not follow the standard recapitalisation timeline.

The CBN Governor Olayemi Cardoso had assured that depositor funds in these institutions remain secure and operations continue under stringent supervisory oversight.

The merger of Unity Bank Plc and Providus Bank Plc, which has received CBN approval, has helped the combined entity meet the N200bn minimum capital requirement for a national banking licence.

Regulatory approvals from the Securities and Exchange Commission and other authorities are in the final stages, with integration activities ongoing.

Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr. Muda Yusuf described the CBN-led recapitalisation drive as “the most successful in terms of impact and fallout,” expressing optimism that the exercise would conclude without disrupting customer services or employment, unlike previous recapitalisation efforts.

Market analysts noted that despite improved capital inflows and regulatory reforms, investors remain cautious, contributing to the mixed performance in bank shares. The cautious sentiment reflects uncertainty over broader economic conditions impacting liquidity, lending, and profitability.

The recapitalisation drive is widely seen as a critical step in enhancing the robustness of Nigeria’s banking sector, promoting financial stability, and preparing institutions for more competitive operations domestically and internationally.