14 Banks Meet New Capital Thresholds as CBN Cuts Interest Rate to 27%

Governor of the Central Bank of Nigeria (CBN), Mr. Yemi Cardoso, announced yesterday that 14 Nigerian banks have fully complied with the new capital requirements under the ongoing recapitalisation exercise.

He made the disclosure in Abuja while presenting the communiqué from the 302nd meeting of the Monetary Policy Committee (MPC).

At the meeting, the apex bank reduced the Monetary Policy Rate (MPR) by 50 basis points—from 27.5 per cent to 27 per cent. The move has drawn commendation from private sector groups, who also urged further reforms to ease Nigeria’s high cost of living.

The recapitalisation exercise, which sets new minimum capital bases for banks depending on licence type, marks the first major reform since 2004, when the CBN raised the benchmark from ₦2 billion to ₦25 billion, prompting a wave of mergers that reduced banks from 89 to 25.

Under the new regime:

• International commercial banks require ₦500 billion.
• National commercial banks must hold ₦200 billion.
• Regional commercial banks need ₦50 billion.
• Merchant banks must meet ₦50 billion.
• National non-interest banks are set at ₦20 billion.
• Regional non-interest banks at ₦10 billion.

Cardoso noted that the MPC welcomed the “significant progress” made so far, stressing that “14 banks have fully met the new capital requirement.” He added:

“The MPC reassured the public that the impact of the removal of forbearance is transitory and does not pose any threat to the soundness and stability of the banking system, price, and other domestic developments.”

The committee also adjusted key regulatory ratios:

• The Cash Reserve Ratio (CRR) for commercial banks was reduced to 45% from 50%.
• CRR for merchant banks was maintained at 16%.
• Liquidity ratio was retained at 30%.
• A 75% CRR was introduced on non-Treasury Single Account (TSA) public sector deposits to manage liquidity.

Cardoso said the MPC’s rate cut was based on five months of sustained disinflation and forecasts of further decline in inflation through 2025, alongside the need to support economic recovery.

He also highlighted Nigeria’s improving macroeconomic stability, pointing to sustained disinflation, stable exchange rates, output growth, and external reserves, which rose to $43.05 billion as of September 11, 2025—covering 8.28 months of imports.

Reactions

• Nigeria Employers’ Consultative Association (NECA): Director-General Adewale-Smatt Oyerinde praised the MPR cut, noting inflation eased to 20.12% in August 2025 from 21.88% in July. He cautioned, however, that benefits would only materialise if businesses gain easier access to credit.
• Centre for the Promotion of Private Enterprise (CPPE): CEO Dr. Muda Yusuf commended the easing stance, describing the new 75% CRR on non-TSA deposits as necessary to “contain excess liquidity risks that could undermine price stability.”
• Association of Small Business Owners of Nigeria (ASBON): President Dr. Femi Egbesola welcomed the first MPR cut in three years, saying it “could gradually ease borrowing costs” for manufacturers and SMEs, though impact may not be immediate.
• Analyst David Adonri (Highcap Securities): While acknowledging the rationale for policy easing, he warned of risks posed by insecurity and global commodity price volatility.

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