Banking Recapitalisation Must Now Translate Into More Productive Lending

• The CBN says 33 banks raised N4.65tn to meet revised capital requirements, strengthening their capacity to support a growing economy.

• The apex bank says the success of recapitalisation will ultimately depend on whether stronger balance sheets translate into productive lending and better financial services.

• It expects banks to strengthen governance, risk management and resilience as they take on larger financing opportunities and face emerging risks.

September 29, () – The Central Bank of Nigeria has shifted its banking sector recapitalisation programme from the amount of capital raised to what stronger bank balance sheets can deliver for the wider economy.

Muhammad Sani Abdullahi, Deputy Governor, Corporate Services, said 33 banks had met the revised minimum capital requirements and raised N4.65tn by the end of the two-year recapitalisation programme.

He spoke on Tuesday at the 38th Seminar for Finance Correspondents and Business Editors in Abuja, with the theme, “Towards a Robust and Resilient Financial System in the Post-Banking Sector Recapitalisation Era.”

The CBN announced the recapitalisation programme in March 2024, requiring banks to raise capital appropriate to their respective licence categories within two years.

According to Abdullahi, stronger capital should give banks greater capacity to finance long-term infrastructure, industrial expansion, and international trade, while providing additional buffers to absorb losses during periods of economic stress.

But he said the amount raised should not be the sole measure of the programme’s success.

“We should assess recapitalisation by the quality of banking services and productive lending it supports, as well as by the amount of capital raised,” he said.

Muhammad Sani Abdullahi, Deputy Governor, Corporate Services, Directorate, CBN. Photo credit: Instagram- Lubanah Delight.
From capital raising to economic impact

The deputy governor said Nigeria’s ambition of building a $1tn economy by 2030 would require banks capable of mobilising and allocating capital on a much larger scale.

He said stronger capital buffers should allow banks to support larger financing needs as the economy expands, particularly in infrastructure, agriculture, manufacturing, services and other productive sectors.

The CBN also expects banks to provide financing that is better suited to the cash flows and investment horizons of businesses, while improving access to appropriate financial products for households and smaller enterprises.

Abdullahi said the benefit of recapitalisation should extend beyond established borrowers to rural communities, women and young entrepreneurs.

He also urged businesses to improve transparency, governance and sustainability, which increasingly influence banks’ credit assessments.

The implication is that the next phase of the reform will be judged less by the size of banks’ balance sheets and more by how effectively the additional capital is deployed into the economy.

Stronger banks face broader risks

The CBN said the larger capital buffers must also be accompanied by stronger governance and risk-management frameworks.

Abdullahi identified credit, market, liquidity and operational risks, as well as cybersecurity, third-party dependencies and climate-related financial risks, as exposures that banks must increasingly manage.

He said the CBN would continue to focus on governance, asset quality, liquidity and large exposures through risk-based supervision, macroprudential surveillance and enhanced stress testing.

“As the Governor has consistently emphasised, preserving monetary and financial stability requires continued vigilance. We must remain forward-looking, data-driven and responsive to developments at home and abroad,” he said.

Digitalisation is also creating new demands on banks, with the CBN expecting institutions to strengthen cybersecurity, data protection, disaster recovery and business continuity.

“Capital, however, is a starting point,” Abdullahi said, stressing that boards and management must maintain sound controls, identify risks early and lend on the strength of viable projects.

Recapitalisation enters implementation phase

The CBN’s assessment comes as other reforms implemented since 2023 begin to reshape the operating environment for banks.

Abdullahi said the foreign exchange market had become more stable, with the average gap between official and parallel-market rates falling from 68.2 percent between January and May 2023 to less than 2 percent.

Gross external reserves stood at $55.60bn on September 11, while headline inflation had moderated to 15.43 percent in July 2026 from 34.8 percent in December 2024. Real GDP growth reached 4.43 percent in the second quarter of 2026.

He cautioned that these improvements did not mean pressure on households and businesses had disappeared.

For the banking sector, the next test is therefore whether the additional capital can be converted into sustainable credit growth, stronger financial intermediation and greater capacity to absorb economic shocks.

The CBN said it would continue to combine stronger supervision with consumer protection, financial inclusion, fintech regulation and support for responsible innovation as banks operate with their new capital bases.

The recapitalisation has strengthened the starting position of the banking industry.

Its longer-term outcome, however, will depend on how effectively banks deploy that capacity while maintaining asset quality, sound governance and resilience.