CBN warns of investors waning  sentiments as banks struggle to meet capital requirement deadline

The Central Bank of Nigeria (CBN) has said that investors sentiments in the capital market is waning from a higher concentration risk in the ongoing banking sector recapitalisation.

The caution was conveyed in the apex bank’s macroeconomic outlook for 2026. The two-year window given to Nigerian banks to comply with the new capital threshold elapses in March.

The apex bank said that this, combined with rising non-performing loans, may weaken banks’ balance sheets and pose systemic risks to the financial sector. “Higher concentration risk from the ongoing banking sector recapitalisation could trigger investor fatigue and crowd-out other issuers. Together, these could derail the outlook for the financial sector,” the Bank stated.

It added that “a significant rise in non-performing loans could impair asset quality, and weaken banks’ balance sheets, thereby posing systemic risk.”

Policy commitment to stability and growth  Despite these risks, the CBN reaffirmed its commitment to balancing price stability with output growth in 2026.

The Bank said it would deploy appropriate policy instruments to attract foreign investment and consolidate stability in the foreign exchange market. The outlook also highlighted plans to deepen financial stability by strengthening the operational integration of the Global Standing Instruction (GSI) framework across financial institutions, enforcing credit discipline, and tightening cybersecurity regulations.

According to the CBN report, growth in monetary aggregates in 2026 is expected to be shaped by exchange rate movements, fiscal operations, election-related spending, and continued implementation of prudential measures.

The CBN projected that the capital market would remain bullish, supported by the recapitalisation exercise, rising investor confidence, and other policy measures aimed at fostering growth.

In March 2024, the CBN directed commercial banks with international authorization to raise their capital base to N500 billion, while those with national licenses must increase theirs to N200 billion. Banks were given a two-year compliance window, with March 2026 set as the deadline.

The recapitalisation drive is expected to strengthen the resilience of Nigeria’s banking sector, but the CBN warned that the concentration of investor activity in bank recapitalisation could limit funding opportunities for other issuers in the capital market.

CBN Governor Olayemi Cardoso disclosed the development during a press briefing at the end of the Monetary Policy Committee (MPC) meeting in Abuja. The updated figure reflects an improvement from the 14 banks that had met the minimum capital requirement as of the last MPC meeting in September, signalling what the Bank described as growing compliance across the sector.