February 01, (THEWILL) — A crucial factor for the success of the current bank recapitalisation is the ability of the Nigeria Deposit Insurance Corporation (NDIC) to safeguard depositors and enhance the stability of the banking system, in accordance with its mandate.
Since it began operations in 1989, the institution has effectively fulfilled this role, contributing to the remarkable growth of the financial services sector. This has also placed NDIC in the global spotlight.
Undoubtedly, this measure has increased stakeholders’ confidence in the financial system and has led to greater investments and innovations, indicating a potential significant impact on the ongoing bank recapitalisation. Currently, banks have adopted advanced digital technologies, while fintech companies dominate the landscape, facilitating seamless financial inclusion.
The recapitalisation policy, which was announced in March 2024, introduced a three-tier licensing structure for regional, national, and international banks. According to the regulations, national banks are required to maintain a minimum paid-up capital of N200 billion, whereas international banks must possess at least N500 billion.
For deposit money banks with a regional licence, the minimum capital requirement is N50 billion, which is also the same limit set for merchant banks with national authorisation. Non-interest banks must maintain a minimum capital of N20 billion for a national licence and N10 billion for a regional licence, respectively.
These reforms are intended to fortify financial institutions, improve resilience against economic shocks, and enable banks to finance large-scale projects that can support Nigeria’s long-term growth. At its essence, the recapitalisation initiative—being implemented through the raising of new capital—aims to prepare the banking system to better withstand shocks, promote economic growth, and protect depositor funds. Industry analysts highlight that the emergence of larger and better-capitalised banks is one of the most significant anticipated outcomes of this initiative.
To date, 23 banks have successfully fulfilled the recapitalisation requirements, a process anticipated to infuse N4.5 trillion in new capital into the banking sector. This development will significantly enhance the industry, which possesses total assets and contingents amounting to N24.23 trillion as of December 31, 2025, based on forecasts from Augusto & Co. The growth is propelled by an increase in deposits and the necessity to comply with the CBN’s minimum capital requirements by the deadline of March 31, 2026.
As of March 2025, there are more than 320 million active bank accounts in Nigeria, according to information from the Nigeria Inter-Bank Settlement System (NIBSS). While the number of active accounts has risen dramatically, the count of unique individual bank customers with linked Bank Verification Numbers reached 67.8 million in 2025. This rapid increase in accounts is attributed to the growth of fintech, mobile money, and traditional banking, all aimed at enhancing financial inclusion. The remarkable expansion of the banking sector, bolstered by strong confidence in the NDIC’s ability to safeguard deposits and ensure stability, is reflected in the capital market.
The banking sector experienced the most significant rally in 2025 and continued to serve as the foundation for the record N100 trillion capitalisation mark of the local stock market as of the current date.
Trading data from the NGX indicated that in 2025, Nigerian banks raised and listed approximately N2.25 trillion, while FGN Bonds and other corporate listings on the NGX amounted to N3.79 trillion and N299.69 billion, respectively. Foreign investor engagement on the Nigerian Exchange (NGX) strengthened in 2025, indicating a notable recovery from years of low activity, as enhanced foreign exchange liquidity, robust equity returns, and policy reforms rekindled offshore interest in Nigerian assets.
Data from the NGX indicates that the total equity market turnover reached approximately N10.54 trillion during the first eleven months of 2025, nearly doubling the N5.59 trillion recorded for the entire year of 2024. Foreign portfolio investors contributed around N1.28 trillion, which represents about 20.8 percent of total transactions for the period, in contrast to N852 billion, or 15.3 percent, in 2024, highlighting a significant year-on-year increase in both absolute value and market share. This improvement signifies a gradual resurgence of foreign capital following several years of weak participation.
Foreign inflows had remained below 15 percent for much of the period from 2019 to 2023, as investors were discouraged by foreign exchange shortages, restrictive repatriation regulations, volatile returns, and uncertainties surrounding fiscal and monetary policies. Although the NGX All-Share Index showed recovery in 2024, it delivered modest gains compared to peers in other African frontier markets, which further diminished offshore interest.
“The thriving rally in the financial sector is driven by the historic recapitalisation policy introduced by the CBN in March 2025, aimed at strengthening banks that could support the PresidentTinubu administration’s goal of achieving a $1 trillion economy by 2030. This reflects the confidence in the banking sector, bolstered by the protection provided by the NDIC mandate,” stated Mike Akanor, an investment expert.
Despite the remarkable growth, it would be unreasonable to assert that the banks are too big to fail. The significant collapse of the global financial system occurred in 2008, with the crisis stemming from the U.S. subprime mortgage market crash in 2007 and culminating in the bankruptcy of Lehman Brothers in September 2008. This event triggered a global liquidity crisis, bank bailouts, and the Great Recession, serving as a pertinent example.
Nigeria’s banking sector has experienced a significant increase in non-performing loans (NPLs), with the overall industry ratio rising to approximately 7 percent in 2025, surpassing the 5 percent prudential limit. This change follows the Central Bank of Nigeria’s (CBN) decision to terminate the regulatory forbearance measures that were implemented during the COVID-19 pandemic. This rise in NPLs is indicative of the conclusion of temporary relief measures that permitted banks to restructure troubled loans without categorizing them as non-performing.
With the cessation of these measures, numerous loans that were previously rescheduled under the forbearance framework have now been recognised as impaired credits, resulting in an increase in the sector’s bad loan ratio. This is how banks’ asset deterioration begins. However, despite exceeding the regulatory threshold, the CBN asserts that the banking system remains generally stable.
Industry statistics indicate that banks continue to function with robust buffers, maintaining an average liquidity ratio of around 65 percent, significantly above the 30 percent minimum requirement, while the capital adequacy ratio is approximately 11.6 percent, surpassing the 10 percent regulatory standard.
According to the apex bank, these metrics imply that lenders still possess adequate capacity to absorb shocks and maintain operations. These factors contribute to the advantages of having a stable financial system, which is a core mandate of the NDIC.
This success narrative is exemplified by the establishment of the NDIC Academy, a facility dedicated to capacity building. The academy serves as a Centre for Deposit Insurance System Training & Education, functioning as a regional learning center specifically designed to enhance capacity in the specialised area of Deposit Insurance systems and Financial Safety-net issues.
The Academy has been established by the Nigeria Deposit Insurance Corporation (NDIC) to function as a center of excellence for the African and Asian sub-regions concerning Deposit Insurance System (DIS) and safety-net matters. This initiative fulfills its core mandate of providing deposit guarantees, supervising banks, resolving bank distress, and managing bank liquidation, while also advancing its public policy goals of protecting depositors, ensuring financial system stability, and enhancing public confidence.
Industry analysts have highlighted that the NDIC’s dedication to maintaining financial system stability and safeguarding depositors’ funds significantly enhances the confidence of both investors and depositors.
THEWILL notes that recently, the NDIC successfully recovered and compensated depositors of the liquidated Heritage Bank Limited, Aso Savings & Loans Plc, and Union Homes Savings & Loans Plc, following the revocation of their operating licenses by the CBN.
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
