A new Central Bank of Nigeria directive has ended weeks of uncertainty by redefining exactly how banks must compute minimum capital.
The Central Bank of Nigeria has released a new directive clarifying how Financial Holding Companies and banks must calculate minimum paid-up capital. The CBN ruled that minimum capital must be based strictly on the par value of issued shares plus any share premium, nothing else. This clarification takes immediate effect and overrides all past interpretations.
The update follows weeks of industry confusion, which had slowed down several banks’ financial reporting. Some institutions counted only paid-up capital, while others added reserves and retained earnings, leading to inconsistent numbers and delayed regulatory approvals.
The directive also affects HoldCos, which must maintain higher issued share capital than all subsidiaries combined. Those previously relying on reserves may now need structural adjustments, especially as recapitalisation deadlines approach.
Major banking groups, FUGAZ, already hold large capital buffers mainly from share premiums. Banks and HoldCos are now expected to recalculate their capital and align future filings with the new rule.
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