The Business NG - September 03, 2025

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Nigeria’s Tier-2 Banks Face Capital Crunch and Consolidation Wave

Nigeria’s tier-2 banks are at a critical crossroads. According to a recent report by SBM Intelligence, lenders such as Wema Bank, FCMB, Fidelity Bank, Stanbic IBTC, and Sterling Bank are confronting mounting pressure to meet the Central Bank of Nigeria’s (CBN) 2026 recapitalisation requirements—or risk being swallowed up in a wave of mergers and acquisitions.

The CBN’s directive, issued in March 2024, sets new capital thresholds aimed at bolstering the resilience of the banking sector: international banks must reach a ₦500 billion capital base, national banks ₦200 billion, and regional banks ₦50 billion by March 2026. The policy is explicitly designed to strengthen financial stability and position Nigerian banks to support the country’s ambitious $1 trillion economy target.

While the recapitalisation order introduces risks for smaller lenders, many tier-2 banks have shown remarkable growth. Fidelity Bank, for instance, has seen its share price soar over 1,100% in five years, from ₦1.65 in 2020 to above ₦21 by mid-2025. Wema Bank has also recorded significant gains over the same period.

The unfolding scenario presents a dual challenge: banks must balance aggressive growth strategies with the urgent need to raise capital. For investors and policymakers, the next 18 months will be decisive in shaping the future of Nigeria’s mid-tier banking sector, determining whether consolidation will dominate or innovation and market agility will prevail.