Nigerian Exchange Limited (NGX) admitted 3.156 billion additional ordinary shares of United Bank for Africa (UBA) Plc to its Daily Official List on January 12, following the bank’s successful rights issue at N50 per 50k share, deepening market liquidity and elevating capital base beyond CBN’s N500 billion international authorisation threshold.

UBA Group Managing Director/CEO Oliver Alawuba

UBA Group Managing Director/CEO Oliver Alawuba hailed the listing as evidence of strong investor trust in the bank’s strategy, noting the N158 billion raise – building on N239 billion from a 2024 public offer – now totals N513 billion to fuel Pan-African expansion across 20 countries plus the UK, US, France and UAE.

The listing, confirmed by NGX’s Head of Issuer Regulation Godstime Iwenkehai, allocates one new share for every 13 held, supporting UBA’s service to 45 million customers and 25,000 employees through retail, commercial and tech-driven banking.

Alawuba pledged the fresh capital would enhance stakeholder value and global reach.

By Blaise Udunze

Nigeria’s economy will be experiencing yet another round of reform; after the new tax implementation, the banking sector recapitalisation exercise will begin within less than three months until the March 31, 2026, deadline. The Central Bank of Nigeria (CBN) Governor, Olayemi Cardoso, disclosed that 27 banks have tapped the capital market via public offers and rights issues.

The figures show that of 21 the 37 commercial, merchant, and non-interest banks in the country have met or exceeded the revised minimum capital thresholds of N500 billion for internationally authorised banks, N200 billion for national banks, N50 billion for regional banks, and N10-20 billion for non-interest banks. With the developments above, policymakers are betting that stronger balance sheets will help banks withstand macroeconomic shocks, finance growth, and restore confidence in the financial system. On the surface, the logic is sound, capital matters. But history warns us that capital alone is not a cure-all.

Nigeria has been here before, going by the 2004-2005 era of the then-governor of CBN, Charles Soludo, whose banking consolidation dramatically reduced the number of banks from 89 to 25 and created national champions. Yet barely five years later, the system was back in crisis, requiring regulatory intervention, bailouts, and the creation of the Asset Management Corporation of Nigeria (AMCON) to absorb toxic assets. The lesson here is clear, which revealed that recapitalisation that ignores structural weaknesses merely postpones failure.

If the current exercise is to succeed, the CBN must use it not only to raise capital but to repair the deeper fault lines that have long undermined the stability, credibility, and effectiveness of Nigeria’s banking sector.

More Capital isn’t Always Better Capital

The first and most critical issue is the quality of capital being raised. Disclosures made by the banks have shown that the combined capital base of about N5.142 trillion is already locked in by lenders across the different licence categories. Bigger numbers on paper mean little if the capital is not genuinely loss-absorbing. In past recapitalisation cycles, concerns emerged about funds being raised through related parties, short-term borrowings disguised as equity, or complex arrangements that ultimately recycled the same risks back into the system.

This time, the CBN must insist on transparent, verifiable sources of capital. Every naira raised should be traceable, free from conflicts of interest, and capable of absorbing real losses in a downturn. Otherwise, recapitalisation becomes an accounting exercise rather than a resilience-building one.

Why Corporate Governance Remains the Achilles’ Heel

Perhaps the most persistent weakness in Nigeria’s banking sector is corporate governance failure. Many bank crises have not been caused by macroeconomic shocks alone, but by poor board oversight, insider abuse, weak risk culture, and excessive executive power.

Recapitalisation provides a rare regulatory leverage point. The CBN should use it to reset governance standards, not just capital thresholds. Boards must be independent in substance, not just in form. Being one of the critical aspects of the banking challenge, insider lending rules should be enforced without exception. Risk committees in every financial institution must be empowered, not sidelined by dominant executives.

Without the apex bank fixing governance, new capital risks become fresh fuel for old excesses.

The Unresolved Burden of Non-Performing Loans (NPLs)

Data from the CBN’s latest macroeconomic outlook showed that the banking industry’s Non-Performing Loans ratio climbed to an estimated 7 percent, pushing the sector above the prudential ceiling of 5 percent. Nigeria’s banking sector continues to be drowned with high volumes and recurring non-performing loans (NPLs), and this is often concentrated in sectors such as oil and gas, power, and government-linked projects. Though with the trend of events, one may say that regulatory forbearance has helped maintain surface stability in the sector, no doubt it has also masked underlying vulnerabilities.

The truth is that a credible recapitalisation exercise must confront this reality head-on. Loan classification and provisioning standards should reflect economic truth, not regulatory convenience. Banks should not be allowed to carry impaired assets indefinitely while presenting healthy balance sheets to investors and the public.

Transparency around asset quality is not a threat to stability; it is a foundation for it.

How Foreign Exchange Risk Quietly Amplifies Financial Shocks

Few risks have damaged bank balance sheets in recent years as severely as foreign exchange volatility. Many banks continue to carry significant FX mismatches, borrowing short-term in foreign currency while lending long-term to clients with naira revenues.

During periods of FX adjustment, these mismatches can rapidly erode capital, no matter how well-capitalised a bank appears on paper. Recapitalisation must therefore be accompanied by tighter supervision of FX exposure, stronger disclosure requirements, and realistic stress testing that assumes adverse currency scenarios, not best-case outcomes.

Ignoring FX risk is no longer an option in a structurally import-dependent economy.

Concentration Risk and the Narrow Credit Base

Another long-standing weakness is excessive concentration risk. A disproportionate share of bank lending is often tied to a small number of large corporates or government-related exposures. While this may appear safe in the short term, it creates systemic vulnerability when those sectors face stress.

At the same time, the real economy, particularly SMEs and productive sectors, remains underfinanced because, over the years, Nigeria’s banks faced significant concentration risk, particularly in the oil and gas sector and in foreign currency exposure, while grappling with a narrow credit base characterised by limited lending to the private sector. This is due to high credit risk and tight monetary policy. Owing to this trend, recapitalisation should therefore be in alignment with policies that encourage credit diversification, improved credit underwriting, and smarter risk-sharing mechanisms, and not the other way round.

Therefore, it will be right to say that banks that grow larger but remain narrowly exposed do not strengthen the economy; they amplify its fragilities.

Risk Management in a Volatile Economy

The recurring inflation shocks, interest-rate swings, fiscal pressures, and external shocks are frequent features, not rare events, which show that Nigeria is not a low-volatility environment.

Currently, the Nigerian banking sector’s financial performance and investment returns are equally affected by various risks, including credit, liquidity, market, and operational risks.

Today, many banks still operate risk models that assume stability rather than disruption. Time has proven that risk management is essential for mitigating these risks and ensuring stability and profitability.

The apex bank must ensure that the recapitalisation process mandates robust, Nigeria-specific stress testing, and banks must demonstrate resilience under severe but plausible scenarios. This includes sharp currency depreciation, interest-rate spikes and sovereign stress. It must evolve from a compliance function to a strategic discipline.

Transparency and Financial Reporting

Investors, depositors, and analysts must be able to understand banks’ true financial positions without navigating a lack of transparent disclosures or creative accounting. Hence, public trust in the banking sector depends heavily on credible financial reporting.

The CBN should use recapitalisation to strengthen the International Financial Reporting Standard enforcement, disclosure standards, and audit quality. In championing this course, banks’ financial statements should clearly reflect capital adequacy, asset quality, related-party transactions, and off-balance-sheet exposures. Transparency is to enable confidence, not about exposing weakness.

Regulatory Consistency and Credibility

Policy credibility has been one of the greatest challenges for Nigeria’s financial regulators.

Abrupt changes, unclear timelines, and inconsistent enforcement undermine investor confidence and weaken reform outcomes.

Recapitalisation must be governed by clear rules, predictable timelines, and consistent enforcement. Both domestic and foreign investors need assurance that the rules of the game will not change midstream. Regulatory credibility is itself a form of capital.

Consumer Protection and Banking Ethics

While recapitalisation focuses on banks’ balance sheets, the public experiences banking through fees, service quality, dispute resolution, and ethical conduct. Persistent complaints about hidden charges and poor customer treatment erode trust in the system and a stronger banking sector must also be a fairer and more accountable one. It must be noted that strengthening consumer protection frameworks alongside recapitalisation will help rebuild public confidence and reinforce financial inclusion goals.

Too Big to Fail and How to Resolve Failure

Looking at what is obtainable in the system, larger, better-capitalised banks can also become systemically dangerous if failure resolution frameworks are weak. This requires that recapitalisation should therefore be accompanied by credible plans for resolving distressed banks without destabilising the entire system or resorting to taxpayer-funded bailouts, which has been the norm in the Nigerian banking sector today. The cynic might say that recapitalisation simply made big banks bigger and empowered dominant shareholders. However, a more prospective approach invites all stakeholders, including regulators, customers, civil society and bankers themselves, to co-design the next chapter of Nigerian banking; one that balances scale with inclusion, profitability with impact, and stability with innovation.

Clear resolution mechanisms reduce moral hazard and reinforce market discipline.

A Moment That Must Not Be Wasted

Recapitalisation is not merely a financial exercise; it is a governance and trust reset opportunity. If the CBN focuses solely on capital numbers, Nigeria risks repeating a familiar cycle of apparent stability followed by crisis.

The banking sector can lay a solid foundation that truly supports economic transformation if recapitalization is used to address governance failures, asset quality, FX risk, transparency, and regulatory credibility.

Nigeria does not just need bigger banks. It needs better banks, institutions that are resilient, transparent, well-governed, and trusted by the public they serve. Hence, it must be a system that creates a more robust buffer against shocks and positions Nigerian banking as a global competitor capable of funding a $1 trillion economy, as the case may be.

This recapitalisation moment must be about building durability, not just size. The cost of missing that opportunity would be far greater than the cost of getting it right.

Blaise, a journalist and PR professional, writes from Lagos and can be reached via: [email protected]

Ecobank Transnational Incorporated (ETI) has joined the trillion-naira exclusive club of firms, marking its first entry in its two decades of being listed on the Nigerian Exchange.

The Pan-African lender saw its valuation surge more than the N1 trillion mark on Monday, January 5, 2026. As of the close of trade on Monday, January 12, the stock had gained 7.4 percent, with its share price hitting N45. ETI has accrued 23 percent over the past four-week period alone, making it the 40th best on NGX.

“Ecobank Transnational Inc. is currently the 23rd most valuable stock on the NGX with a market capitalisation of N 1.07 trillion, which makes up about 1.02 percent of the Nigerian Stock Exchange equity market,” according to African Stock Exchange data, a market analytics platform.

This historic feat follows the early repayment of $245 million of Ecobank’s $300 million Eurobond issuance to bondholders who validly tendered their notes ahead of the February 2026 maturity date.

This must have led to an improved confidence in the bank’s operation, which gained 61 percent a year ago despite the sell-off that rattled the bank’s stock in 2025.

More Nigerian lenders are seeing their market capitalisation cross the N1 trillion mark, suggesting renewed investor confidence in the sector that’s undergoing a recapitalisation exercise.

GTCO remains the most capitalised, with its valuation reaching N3.62 trillion as of January 12, followed by Zenith Bank, First Bank of Nigeria, United Bank for Africa, Access Bank, and Stanbic IBTC with N2.75 trillion, N2.16 trillion, N1.94 trillion, N1.23 trillion, and N1.7 trillion, respectively. By crossing N1 trillion, Ecobank now sits among the country’s biggest lenders within the trillion-naira club.

Fidelity Bank, on April 4, 2025, saw its market value shoot above N1 trillion, making it the first tier-2 bank to cross the threshold. However, it slipped below the mark on May 20 following a Supreme Court ruling that pressured its share price. The bank’s valuation currently stands at N957 billion.

The membership of the exclusive club of listed companies with at least N1 trillion valuation has increased to 24, compared to 17 a year earlier, according to data from the Nigerian Exchange Limited.

The top five members include BUA Foods with a market cap of N14.38 trillion, MTN Nigerian Communications with N12.70 trillion, Dangote Cement with N10.71 trillion, Airtel Africa with N8.53 trillion, and BUA Cement with N6.2 trillion.