Three developments will define banks’ recapitalisation before March deadline —Proshare

A finance and markets information company, Proshare, has identified three major developments expected to shape the final phase of Nigeria’s banking sector recapitalisation programme as the March 31 regulatory deadline approaches.

The Nigerian banking industry is undergoing one of its most significant structural adjustments in years as lenders race to comply with new capital requirements introduced by the Central Bank of Nigeria (CBN).

According to Proshare Research, the outcome of a court hearing involving Unity Bank Plc and Providus Bank Limited represents the most time-sensitive development in the remaining days of the recapitalisation window.

The hearing was to determine whether the proposed business combination between the two banks receives court sanction. If approved, the combined entity will move into the regulatory review stage by the CBN and could potentially exit the list of unresolved institutions before the March 31 deadline.

Proshare noted that any further adjournment of the hearing could significantly compress the timeline required to complete the merger process, making compliance within the regulatory deadline increasingly difficult.

Beyond the merger process, Proshare said the role of foreign investment in the recapitalisation exercise remains another critical factor to monitor.

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The research firm revealed that about $706.84 million in foreign capital has entered the Nigerian banking sector during the recapitalisation programme.

Analysts say it remains uncertain whether the inflow represents a one-off investment cycle or the beginning of sustained foreign institutional participation in Nigeria’s banking industry.

Clarity on this issue is expected to emerge after the recapitalisation deadline when banks begin disclosing their updated ownership structures and board compositions.

Proshare also identified stress-test preparedness among banks as the third development likely to shape the sector’s outlook after the capital-raising exercise.

Under the regulator’s directive, banks are expected to commence stress testing from April 1, 2026. The exercise will require financial institutions to demonstrate their ability to withstand adverse economic scenarios and maintain adequate capital buffers.

According to analysts, banks that raised capital only to meet the regulatory minimum requirements may face additional supervisory scrutiny if stress tests reveal weaknesses in their capital adequacy positions.

Overall, Proshare said the recapitalisation programme has already delivered significant structural outcomes for the sector.

Out of 37 banks tracked in its compliance monitoring framework, 30 institutions have met or exceeded the CBN’s revised minimum capital thresholds. Verified capital raised across the industry has surpassed ₦4.05 trillion.

Domestic investors accounted for about 71.67 per cent of the capital raised, while foreign investors contributed the remaining 28.33 per cent, reflecting continued institutional interest in Nigeria’s banking sector.

The capital-raising exercise also saw banks deploy a mix of financial instruments including rights issues, public offers, private placements and capital injections from parent companies.

However, five institutions remain unresolved as the deadline approaches. In addition to Unity Bank and Providus Bank, three other lenders — Union Bank of Nigeria Plc, Polaris Bank Limited and Keystone Bank Limited — have yet to publicly disclose their capital-raising instruments.