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RenCap estimates Nigerian banks may need to raise more than ₦1.7 trillion if the CBN adopts its proposed HoldCo capital framework.
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Access Holdings faces the largest projected funding gap, while UBA, Zenith Bank, and Fidelity Bank could also require fresh capital.
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The investment bank warns that the proposal could dilute shareholder value and reduce banks’ returns unless key provisions are revised.
July 17, (THEWILL) — Renaissance Capital (RenCap) has warned that Nigerian banks could be required to raise more than ₦1.7 trillion in fresh capital and undertake significant restructuring if the Central Bank of Nigeria (CBN) proceeds with its proposed Financial Holding Company (HoldCo) framework.
In a report released on Thursday, the investment bank said the apex bank’s proposal requiring holding companies to maintain capital equivalent to 20 percent above the combined paid-up capital of their subsidiaries could significantly dilute shareholder value and reduce returns on equity at a time when banking sector profitability is already moderating.
Access Holdings Faces Largest Capital Requirement
RenCap identified the proposed 20 percent capital buffer as the most consequential aspect of the draft framework, arguing that the requirement could prove value-destructive because capital held at the holding company level generates little or no operating return.
According to the report, Access Holdings would require the largest capital injection among existing HoldCos at ₦656.04 billion.
Besides Access Holdings, RenCap estimates First HoldCo would require ₦135.03 billion, FCMB Group ₦112.84 billion, GTCO ₦56.02 billion and Stanbic IBTC Holdings ₦11.84 billion in additional capital, highlighting that the proposed framework would affect nearly every major HoldCo, albeit to varying degrees.
RenCap estimates Access Holdings would need to raise capital equivalent to almost half of its current market value, making it the most affected financial holding company.
A collage of Fidelity Bank Zenith Bank and UBA Photocredit Fidelity Bankseeklogo UBA Bank UBA ZenithBank CrystalPNG
More Banks Could Fall Within the New Framework
The report noted that the proposed guidelines would also affect banking groups that currently operate outside formal HoldCo structures.
Under the draft rules, closely linked entities would be required to consolidate under a non-operating holding company, potentially bringing United Bank for Africa (UBA), Zenith Bank and Fidelity Bank within the framework.
RenCap estimates its potential capital requirements at:
UBA – ₦416.01 billion
Fidelity Bank – ₦188.83 billion
Zenith Bank – ₦166.88 billion
Measured against market capitalisation, UBA would face the largest relative funding burden, followed by Fidelity Bank and Zenith Bank.
RenCap Calls for Changes to Proposed Rules
The proposed guidelines represent the biggest review of Nigeria’s HoldCo framework since it was introduced in 2014 following the end of universal banking.
Among other changes, banking groups would be required to adopt simplified ownership structures, while foreign subsidiaries would be owned directly by the holding company instead of operating banks.
RenCap warned that raising additional capital under the proposed framework could become increasingly difficult as banking profitability continues to moderate.
To reduce the potential impact on shareholders while preserving the CBN’s supervisory objectives, the investment bank urged the regulator to remove the additional 20 percent HoldCo capital buffer, permit the redeployment of excess capital arising from licence downgrades, clarify solo capital adequacy requirements and ease restrictions on intra-group financing and shared services.
The report concludes that these adjustments would strengthen group supervision without imposing unnecessary costs on shareholders or weakening investor confidence in Nigeria’s banking sector.
Ogochukwu Onwaeze is a writer specializing in business and economic journalism. At THEWILL News Media, she translates market trends, financial developments, and policy shifts into clear and engaging stories.
