Nigerian banks are facing a critical challenge as they strive to comply with newly imposed capital requirements that have skyrocketed. Experts in the publication emphasize that with nonperforming loans on the rise, the financial stability of these institutions is under significant pressure.
Recapitalization Program by the Central Bank of Nigeria
The Central Bank of Nigeria (CBN) has set forth a recapitalization program that demands banks with international licenses to increase their minimum capital from 50 billion naira to 500 billion naira, marking a staggering tenfold increase. This requirement, announced in 2024, has left many banks scrambling to secure the necessary funds to meet the new thresholds.
Surge in Nonperforming Loans
As of now, nonperforming loans have surged to 7%, surpassing the regulatory limit of 5%. This alarming trend complicates the banks' efforts to raise capital, as deteriorating loan books could jeopardize their profitability and overall risk-bearing capacity. While some banks have successfully met the new capital requirements, the majority are still in a race against time to bolster their financial positions amidst these challenging conditions.
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