The Central Bank of Nigeria (CBN) has given three commercial banks until June 2016 to recapitalise after they failed to hit a minimum capital adequacy rate of 10 per cent, the bank said in a report on its website.
The CBN did not name the banks but said they were from the group of 14 in Africa’s biggest economy that have licenses to operate as regional and national lenders, with respective capital bases of N10 billion ($50 million) and N25 billion.
With a number of Nigerian banks having postponed moves to raise fresh funds, the CBN said it was monitoring the three banks’ recapitalisation plans and that 10 others with international status met the 15 per cent minimum capital rate for that category of bank at the end of June. The recapitalisation schedule, contained in a report dated October 30, only came to light on Friday.
Nigerian lenders have been shoring up their balance sheets in preparation for adopting stricter international requirements that analysts say could erode capital ratios by between 100 and 400 basis points to near the regulatory minimum of 15 percent.
Meanwhile, poor capital conditions at home due to slowing economic growth have weakened domestic markets, analysts say. Last week, the central bank told commercial lenders to double provisions on performing loans to two per cent to build adequate buffers against unexpected losses, as liquidity ratios fall.
It said lower revenues for government and oil companies due to plunging crude prices have led to unsecured exposures for banks that are likely to increase credit risk and loan losses.