Nigeria’s lenders are under pressure to meet an April 30 deadline set by the Central Bank of Nigeria (CBN) to submit Board-approved Risk-Based Capital (RBC) stress test reports, marking a tougher phase of oversight after the industry’s recapitalisation exercise.
- +Banks face April deadline in new capital stress regime
The directive, issued March 6, 2026, requires banks to assess how their capital positions would hold up under adverse credit scenarios, detailing execution methodology, regulatory compliance and capital implications.
The directive, issued March 6, 2026, requires banks to assess how their capital positions would hold up under adverse credit scenarios, detailing execution methodology, regulatory compliance and capital implications. The move signals a shift from measuring the size of capital to testing its resilience.
In a joint statement signed by Olubukola A. Akinwunmi, director of Banking Supervision, and Hakama Sidi Ali, acting director of Corporate Communications, the CBN said the policy is aimed at “safeguarding the gains of the just concluded recapitalisation exercise,” adding that it has strengthened its risk-based capital adequacy framework by requiring banks to “conduct regular stress testing across defined scenarios and maintain appropriate capital buffers.”
The Central Bank said the framework will be supported by periodic reviews of prudential guidelines and supervisory processes to reinforce governance, risk management and overall sector resilience.
The new regime builds on provisions of the Banks and Other Financial Institutions Act (BOFIA) 2020 and supplements the 2019 stress testing guidelines, extending rigorous assessment across all on- and off-balance sheet credit exposures.
While the March 31 recapitalisation exercise focused on meeting minimum capital thresholds, analysts say the RBC directive goes further by interrogating the quality of that capital. Analysts at DataPro said the stress test is designed to act as the “ultimate filter” for the recapitalisation programme, warning that “large paid-up capital alone may not ensure stability if underlying assets are deteriorating.”
According to DataPro, the framework mandates a 12-month simulated migration of assets, testing whether newly raised capital can absorb “realistic waves of defaults without breaching minimum Capital Adequacy Ratios.”
The CBN confirmed that 33 banks have met the revised minimum capital requirements, while a limited number remain under regulatory and judicial processes. It added that all banks remain operational and the sector continues to maintain capital adequacy ratios above international Basel benchmarks, with minimum thresholds of 10 percent for regional and national banks and 15 percent for internationally licensed lenders.
The regulator said the recapitalisation programme, combined with an orderly exit from regulatory forbearance, has improved asset quality, strengthened balance sheet transparency and reinforced financial system stability.
Still, the stress tests could expose fresh capital gaps. DataPro noted that meeting recapitalisation targets “ensures minimum paid-up capital but does not guarantee overall financial resilience,” adding that the RBC test evaluates the “loss-absorption capacity of that capital against realistic asset deterioration scenarios.”
If weaknesses are identified, banks will be required to raise additional capital beyond initial thresholds. This will be enforced through what DataPro described as the “Higher of 50/100” rule, under which lenders must meet “100 percent of the bank’s internally reported stressed shortfall, or 50 percent of the shortfall computed by the Central Bank of Nigeria’s own analysis.”
Banks will have an 18-month window to close any capital gaps identified. DataPro said the rule is designed to ensure “conservatism and regulatory alignment,” while forcing institutions to strengthen their capital base where vulnerabilities exist.
Institutions with shortfalls will face tighter oversight, including a follow-up stress test six months after the capital raise period, while compliant banks will remain on a 12-month testing cycle.
Industry participants say implementation has already begun. Ayokunle Olubunmi, head of Financial Institutions Ratings at Agusto & Co, said “most banks have started it as it’s effective, April 2026,” signaling early compliance with the directive.
The framework also introduces additional safeguards for vulnerable sectors. The CBN now requires a 10 percent provisioning floor for weakened industries such as manufacturing and agriculture, a move aimed at cushioning banks against macroeconomic shocks including foreign exchange volatility and commodity price swings.
DataPro said the Board of each bank “must prioritise asset quality and governance to avoid triggering further recapitalisation obligations after the stress test,” highlighting the growing importance of internal risk controls under the new regime.
The tougher stance reflects Nigeria’s broader economic ambitions. Authorities are pushing for a banking system capable of supporting large-scale infrastructure and industrial financing, with “bulletproof” balance sheets needed to sustain growth and absorb shocks as the country targets a $1 trillion economy by 2030.
With the RBC framework taking effect from April 1, the message from regulators is clear: recapitalisation is no longer enough. Banks must now prove their capital can survive stress.
