Credit rating experts at S&P Global have predicted that the number of banks in Nigeria will likely decline in 2025 as smaller banks may fail to meet the new minimum capital requirement, forcing them to merge.
They, however, pointed out that the projected decline will not affect the health of the economy’s banking sector.
“Although we expect the number of banks will decline as some smaller banks merge, this will not affect the stability of the sector, which is concentrated with the top-tier banks accounting for 70% of system assets,” the experts wrote in a new report.
In a major shake-up of the banking sector, the Central Bank of Nigeria overhauled minimum paid-out capital requirements in May 2024, imposing much higher thresholds.
For instance, while commercial banks seeking international licenses must upgrade their capital base to ₦500 billion, national and regional banks must capitalise to the tune of ₦200 billion and ₦50 billion respectively.
Following the apex bank's announcement, many of Nigeria's most prominent banks strengthened their equity base by securing regulatory and shareholder approvals to launch rights issues and public offers open for subscription.
Zenith Bank, one of Nigeria’s leading financial institutions, raced past every other bank to raise ₦350.4 billion, elevating its share capital to N614.6 billion and surpassing the regulatory minimum requirement by ₦114.6 billion ahead of the May 2026 deadline.
In a press release issued on Monday, the bank disclosed that its public offer was 160.47% subscribed, with ₦4.4 billion distributed, while the rights issue was 100.18% subscribed with a total 5.2 billion ordinary shares allotted, indicating substantial interest from local and foreign investors.
This development aligns with S&P Global's prediction that most rated banks in the West African country will successfully meet their capital issuance requirements by the end of 2025.
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The agency also believes that “the overall capital exercise will be positive, as it will support banks’ loss absorption capacity.”
Nigeria's central bank previously stated that the decision to recapitalise the banking sector aimed to bolster the resilience, solvency, and stability of financial institutions operating in the space. However, based on the latest projections not every bank will survive the impacts of its new policy.
