Executives from top banks in Nigeria have initiated discussions surrounding potential mergers and acquisitions. Larger banks are eyeing weaker institutions for possible acquisitions, while middle-strength and weaker banks are exploring alliances that could lead to mergers.
This strategic move comes against the backdrop of directives from the Central Bank of Nigeria (CBN) urging Deposit Money Banks (DMBs) to bolster their capital base. CBN Governor Cardoso, speaking at the Chartered Institute of Bankers of Nigeria’s 58th Annual Dinner, emphasized the need for banks to gear up for a projected $1 trillion economy envisioned by President Bola Tinubu.
“At the recent Bankers’ Committee meeting, I underscored the economic ambitions outlined by the President. The administration aims to achieve a GDP of $1 trillion over the next seven years,” Cardoso stated.
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The CBN’s demand for banks to increase their capitalization has been met with approval from industry executives. A bank CEO expressed support for the CBN’s policy direction and indicated his institution’s willingness to raise additional capital, while the details were not finalized.
“Even before the CBN governor’s announcement, our bank was considering raising new capital to significantly increase our capital base.” This transition is expected to take place in the first quarter of 2024. “We are in accordance with the CBN’s directive,” the CEO stated.
The ongoing talks among banking institutions hint at an impending reshaping of Nigeria’s financial sector. The prospect of mergers and acquisitions underscores a strategic maneuver aimed at reinforcing the industry’s financial robustness in alignment with the nation’s economic growth aspirations.
