Nigeria’s banks are racing toward a firm deadline set by the Central Bank, but the path has turned bumpy as tight liquidity and nervous investors slow the recapitalisation effort that was expected to reshape the sector.
Efforts that should have boosted confidence have instead stirred fresh questions about whether some lenders can cross the finish line without deals that change the industry’s structure.
Banks Struggle to Make Headway as Deadline Looms
Progress has stayed uneven, and the slowdown is beginning to rattle nerves inside the market.
Some bankers privately admit they’re frustrated, because they expected stronger support from investors.
The Central Bank of Nigeria (CBN) has confirmed that sixteen banks have already met their new capital thresholds ahead of the March 31, 2026 deadline.
But at least 14 others remain behind, creating a split between stronger institutions and those still scrambling.
The recapitalisation programme was rolled out to make balance sheets sturdier and prepare banks for shocks that have become common in recent years.
Yet almost a year in, noticeable progress is limited.
The reasons vary, but analysts say tight financial conditions top the list.
Liquidity Is Drying Up, Fueling Investor Hesitation
Several analysts say the current environment feels unusually strained.
Money is expensive.
With the Monetary Policy Rate pinned at 27%, borrowing has become tougher for both companies and individuals.
That has thinned liquidity right across financial markets.
Treasury yields have surged, pulling investors toward risk-free returns that now compete directly with bank equities.
Higher yields mean investors prefer safety over uncertainty, especially when returns are already attractive.
One investment banker, Johnson Grant, put it bluntly: “Liquidity is locked up in government securities because the rates are too attractive right now,” he said, adding that many institutions simply don’t want to take fresh risks while inflation remains stubborn.
Some fund managers echo this worry in private.
They say deploying billions into banks doesn’t feel wise when the government is offering double-digit returns with zero stress.
Meanwhile, smaller banks whisper that they worry investors don’t see the upside in putting money into lenders that may end up merging anyway.
Merger Talks Quietly Gain Steam Behind the Scenes
Discussions that were once seen as far-fetched are now happening quietly.
A few mid-tier banks have begun speaking to advisers.
These conversations are mostly informal, according to people familiar with the matter, but they’re picking up.
The CBN has not discouraged mergers, and some analysts believe the regulator expects a slimmer, stronger banking sector at the end of this exercise.
For many banks, mergers are starting to look like the only realistic path.
A top industry analyst, who asked not to be named, said some institutions simply “won’t be able to raise the capital they need in this kind of market.”
• One banker said boards are quietly running financial models to see which combinations make sense.
But it’s not clear how many institutions will actually choose that route.
There’s still time before March 2026, and some banks hope liquidity will improve early next year.
Investors Want Stability Before Committing Fresh Funds
The investment mood feels cautious, almost guarded.
Returns are fine elsewhere, and investors want policies that reassure them the economy is stabilising.
Two short paragraphs follow to show the shift in tone.
Many investors are also worried about currency volatility.
Some analysts believe banks need clearer communication about their long-term strategies to persuade investors.
Others say confidence will improve if inflation cools and borrowing costs settle.
Still, a few bright spots exist.
Some banks with healthier books have successfully raised capital from existing shareholders.
The table below shows a simplified snapshot of investor sentiment based on market surveys from Lagos-based financial analysts:
| Factor Influencing Investor Decisions | Impact Level |
|---|---|
| High Treasury Yields | Very High |
| Inflation Concerns | High |
| Currency Risk | Medium |
| Bank-Specific Performance | Medium |
| Political Stability | Medium |
One broker said investors want “stability they can trust, not just policy statements.”
For now, the mood stays cautious.
Pressure Mounts as Banks Navigate a Tight Market
Some banks face tougher constraints than others.
Mid-tier institutions feel the squeeze most.
They lack the brand strength of bigger banks.
That limits how much they can ask for from investors.
Capital-raising roadshows have also taken longer to organise, and a few institutions are revising their targets.
Some bankers say the timeline is too tight to fully unlock new equity in these conditions.
One banker said, almost jokingly, that “every meeting ends with a please-call-us-later kind of tone,” which shows how hard the sell has become.
Still, there’s growing belief that regulators may stick firmly to the deadline.
The CBN has insisted that stability is a top priority.
Some analysts see 2026 as a possible turning point for the sector.
Whether it brings a smaller number of stronger banks or a reshaped industry altogether is anyone’s guess.
