BREAKING: CBN’s 20 Percent HoldCo Capital Rule Could Force Banks To Raise ₦1.7trn – RenCap

• RenCap says Nigerian banks may need to raise over ₦1.7 trillion if the CBN adopts its proposed HoldCo capital framework.

• The proposal would require financial holding companies to maintain a 20 Percent capital buffer above their subsidiaries’ paid-up capital.

• The investment bank warns the rule could trigger fresh fundraising, restructuring and lower returns for shareholders.

Renaissance Capital (RenCap) has warned that Nigerian banks may need to raise more than ₦1.7 trillion in fresh capital if the Central Bank of Nigeria (CBN) proceeds with its proposed Financial Holding Company (HoldCo) framework.

In a report released on Thursday, the investment bank said the proposed rule requiring HoldCos to maintain capital equivalent to at least 20 percent above the combined paid-up capital of their subsidiaries could trigger fresh fundraising and restructuring across Nigeria’s banking sector.

RenCap also cautioned that the proposal could dilute shareholder value and weigh on banks’ returns on equity at a time when profitability across the sector is already moderating after a period of record earnings.

More details shortly.