Business
Only Seven Banks Can Meet CBN Recapitalisation Requirements – Report
Published
1 year agoon
By
Editor
No fewer than 17 out of the existing 24 Deposit Money Banks may be unable to meet the Central Bank of Nigeria’s capital requirement if it is increased from its current N25bn, according to a report by Ernst and Young.
The new report, titled “Navigating the Horizon: Charting the Course for Banks amid Plans for Recapitalisation”, noted that if the apex bank raised the capital base of commercial banks in the country by 15-fold from the current N25bn, only seven banks may survive.
The CBN Governor, Olayemi Cardoso, had in several fora stated that the apex bank would consider an increase in the minimum capital base of banks in the country as part of its efforts to strengthen their capacity to support Nigeria’s drive to become a $1tn economy by 2026.
The current capital base is stratified based on the type of banking license – banks with regional, national and international licenses are currently expected to maintain a minimum capital base of N10bn, N25bn and N50bn, respectively.
READ ALSO: JUST IN: CBN Begins Sales Of Dollars To BDCs
The proposed increase in the capital base is coming nearly two decades after the CBN’s 2004 banking reform, which led to an increase of the then prevailing capital base from N2bn to N25bn.
The 2004 banking reform was characterised by massive mergers and acquisition activities, which ultimately resulted in the reduction of the number of banks in the country from 89 to 25 banks.
In the last few months, FBN Holdings, Wema Bank and Jaiz Bank had proposed Rights Issues, while Fidelity Bank announced plans to raise additional capital via the issuance of 13,200 billion ordinary shares via public offer and rights issue.
Ernst and Young, a global financial services company, said in the report that some banks may depend on different recapitalisation options, which include mergers and acquisitions, initial public offerings, placements and/or right issues and undistributed profit (retained earnings) despite financial soundness indicators show that Nigerian banks were largely safe and resilient as of 2023.
According to the report, the recent plan by the CBN to increase the capital base of banks will lead to a series of mergers and acquisitions as witnessed during the last recapitalisation exercise in 2004/2005.
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The report read partly, “The recent plan by the CBN to increase the capital base of banks could again lead to M&A activities but not as widespread as was the case in 2004/2005 given the relatively solid financial positions of the banks today as well as the occurrence of several M&A activities in the banking sector over the past 10 years.
“While the CBN governor did not indicate the magnitude of the proposed hike in the capital base, we have assumed what the proposed increment will be based on three different scenarios underpinned by current macroeconomic conditions. On the back of that, we were able to determine the number of banks (across the three licence types) that may fall below the new minimum capital thresholds.
“In a worst-case scenario, i.e., given a capital multiplier of 15, about 17 out of 24 banks would not meet the new minimum capital.”
The report noted that the plan to recapitalise banks was premised upon the recent devaluation of the naira in 2023.
It explained that the exchange rate as of 2005 during the last exercise in 2005 stood at N132.9/$ but the naira currently exchange for over N1400/$.
According to the firm, this implies that the recapitalisation may require a capital multiplier of 10 or more based on the exchange rate differentials.
“On this basis, a worst-case scenario given a 15x capital multiplier for 24 banks will be considered based on the type of banking licenses held. We have benchmarked the current capital of these banks against the current capital requirement and four recapitalization scenarios,” it noted.
PUNCH
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Business
NNPCL Reduces Fuel Price After Dangote Refinery’s Adjustment
Published
2 weeks agoon
August 14, 2025By
Editor
The Nigerian National Petroleum Company Limited has reduced its premium motor spirit pump price on Thursday, according to DAILY POST.
It was confirmed that NNPCL retail outlets in the Federal Capital Territory, Abuja, have reduced their pump price to N890 per litre from N945.
This new fuel price has been reflected in NNPCL retail outlets such as mega station Danziyal Plaza, Central Area, Wuse Zone 4, Wuse Zone 6, and other of its filling stations in the nation’s capital.
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The latest downward review of fuel price in NNPCL outlets represents an N55 reduction in fuel pump price.
“It was reduced to N890 per litre this afternoon, down from N945,” an NNPCL fuel attendant told DAILY POST anonymously on Thursday.
This comes a Nigerian filling station, MRS Empire Energy, on Thursday adjusted their fuel pump price to N885 and N946 per litre, down from N910 and N955 per litre.
The latest fuel price reduction trend is unconnected to Dangote Refinery’s ex-depot petrol price adjustment by N30 to N820 per litre from N850 and the price of crude oil in the international market.
Dangote Petroleum Refinery has announced a reduction in the ex-depot (gantry) price of Premium Motor Spirit, PMS, commonly known as petrol, by N30, from N850 to N820 per litre, effective from August 12, 2025.
This was disclosed in a statement by the company’s spokesman, Anthony Chijiena, on Tuesday.
The 650,000-barrel-per-day plant said the move is part of its unwavering commitment to national development, assuring the public of a consistent and uninterrupted supply of petroleum products.
READ ALSO:Dangote Refinery Gets New CEO
“In line with our dedication to operational excellence and sustainable energy solutions, Dangote Petroleum Refinery will commence the phased deployment of 4,000 CNG-powered trucks for fuel distribution across Nigeria, effective August 15, 2025,” said Chijiena.
The announcement comes as the refinery prepares to commence direct fuel distribution nationwide. The development is expected to lead petroleum product marketers to reduce their pump prices in the coming days.
In Abuja, the retail fuel price stood between N885 and N970 per litre as of Tuesday evening.
Business
Indian Refiners Abandon Russia For Nigerian Crude, As Dangote Refinery Relies On US
Published
2 weeks agoon
August 11, 2025By
Editor
India Refineries have abandoned Russian crude for Nigerian crude, while domestic refiner Dangote Refinery relies heavily on West Texas Intermediate crude from the United States of America.
This followed a recent sanction threat by US president Donald Trump on India over continued patronage of Russian crude.
According to Reuters, industry sources said that Indian Oil Corporation recently bought one million barrels of Nigeria’s Agbami crude for September 2025 delivery in a tender awarded to global trader Trafigura.
Also included are one million barrels of Angola Girassol, one million barrels of US Mars, three million barrels of Abu Dhabi Murban, and two million barrels of Nigerian oil, according to Reuters.
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The report noted that the purchase is part of a broader sourcing spree that has seen Indian refiners secure millions of barrels from non-Russian sources post July 2025.
Meanwhile, Indian refiners secured purchases of Nigerian crude grades; the $20bn Dangote Petroleum Refinery in Ibeju-Lekki, Lagos, is relying on around 60 percent on US and other imoorts to feed its processing units.
Data showed that the refinery imported an average of 10 million barrels in July 2025, saying it was increasingly relying on the US for its feedstock despite the naira-for-crude deal with the Federal Government, which kicked off in October last year.
According to Reuters, the Indian Oil Corp and Bharat Petroleum have bought a million barrels of non-Russian crude billed for delivery in September and October after the US pressured India to halt purchases from Russia.
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Indian state refiners had been largely absent from the Nigerian crude market spotlight since 2022; they have in the past concentrated on Russian crude amid the Russian-Ukrainian war. However, the Indian refiners paused Russian purchases in late July 2025 after pressure from US President Donald Trump.
On the part of Dangote Refinery, data from commodities analytics firm Kpler showed that in July, US barrels accounted for about 60 percent of Dangote’s 590,000 barrels per day of crude intake, with Nigerian grades making up the remaining 40 percent.
In July, the Dangote refinery’s crude imports surged to a record 590 kbd—driven largely by US barrels overtaking Nigerian supply for the first time—amid ongoing domestic sourcing challenges, Kpler reports.
“While WTI has held a significant share in Dangote’s import slate since March, this is the first time US crude has overtaken Nigerian supply—a shift driven by several factors,” Kpler stated.
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