Recapitalisation Crunch: Nigerian Banks Face Legal & Investment Hurdles
High-Stakes Recapitalisation
WITH the CBN recapitalisation deadline approaching, Union, Keystone, Unity, and Polaris Banks are confronting a high-pressure scenario. Unlike well-capitalised peers, these institutions are navigating legal disputes, ownership uncertainties, and investor skepticism, making the exercise as much about credibility as capital.
According to Titus Iduma, a Lagos-based banking analyst, “Recapitalisation is no longer just about raising money. It is about governance, earnings outlook, and regulatory alignment. Investors must have confidence in these banks’ ability to comply.”
Union Bank: Investor Confidence vs Legal Hurdles
Union Bank’s recapitalisation depends heavily on foreign investment. While UAE-based investors are reportedly interested, a lingering dispute with TGI Group creates uncertainty. Analysts warn that any delay in resolving the matter could jeopardise regulatory compliance and trigger forced restructuring or strategic dilution.
Keystone Bank: Local vs Foreign Solutions
Keystone Bank is exploring both local and foreign options. Local consortia are competing to provide the required capital, but analysts question whether domestic investors can fully meet CBN’s thresholds. A hybrid approach blending foreign capital with local knowledge could fast-track approval and strengthen the bank’s balance sheet.
Unity Bank: Merger as a Strategic Move
Unity Bank’s planned merger with Providus Bank offers a model solution. With capital structure agreed and regulatory alignment nearly complete, the merger would improve scale, governance, and depositor confidence. Analysts emphasize that timely execution is critical to prevent reopening questions about the bank’s viability as a standalone entity.
Polaris Bank: Consolidation Likely
Polaris Bank is expected to either secure an investor-led recapitalisation or merge with another Tier-2 bank, likely Wema. Analysts note that consolidation would reduce systemic risk, create operational efficiencies, and meet regulatory expectations faster than a purely capital-raising approach.
Implications for the Banking Sector
The coming months will determine whether these banks survive independently or become part of Nigeria’s ongoing consolidation trend. Regulatory oversight, investor commitment, and legal resolutions must align perfectly.
Cyril Amkpa, an economist, summed it up: “Banks that miss timelines risk losing strategic control. The CBN prefers orderly solutions, but patience is not unlimited.”
