Banking
More Banks to Raise Capital in 2017
By Obinna Chima
The macro-economic challenges in the country as well as the level of depreciation suffered by the nation’s currency, will compel more commercial banks to seek for avenues to beef their capital this year, a Lagos-based investment and research firm, CSL Stockbrokers Limited stated in a report titled: “Capital Adequacy: Pulse Check.”
The move, the firm added, is expected to enable the financial institutions withstand any shock in the industry as well as to remain above the regulatory threshold.
Capital adequacy is a persistent issue for a number of Nigerian banks. Regulatory capital ratios have been impacted by the large depreciation of the naira given the extent of dollar lending in the sector. They have also been hit by the sharp rise in impairments (implying little or no retained earnings).
The Central Bank of Nigeria (CBN) requires that banks with international subsidiaries maintain a capital adequacy ratio (CAR) of 15 per cent while banks without international subsidiaries maintain a CAR of 10 per cent. The minimum requirement for systemically important banks (effective July this year) is 16 per cent.
First City Monument Bank Limited (FCMB) last week sold N5.1 billion bonds, less than it originally planned to raise, at an interest rate coupon of 17.25 percent, its advisers said on Friday. The seven-year bond was issued by way of a book-building with Standard Chartered Bank, local investment bank Chapel Hill Denham and FCMB Capital Markets as book runners. The offer was fully subscribed.
But before the recent Access Bank’s offer, the last Eurobond issued out of Nigeria was in October 2014 by Seven Energy Finance Limited.
Sourcing naira bonds has also become a tough call given high interest rates on treasury bills and FGN bonds.
Wema Bank had embarked on an issue of N20 billion in local currency bonds after scrapping plans in 2015 to issue a $100 million 7-year dollar bond because of currency risks. Sterling Bank also tried to raise a N35 billion local currency-denominated bond last year.
However, a look at banks’ nine months 2016 capital adequacy ratios (CAR), according to the report suggested that the industry may begin to see a flurry of capital raising activities if macro-economic conditions fail to improve.
Nonetheless, the report indicated that the smaller banks may have more difficulty in finding willing investors in their foreign bond market and the domestic market. The bigger banks however appeared to have performed better last year as Guaranty Trust Bank successfully redeemed its $500 million Eurobond early 2016. Access Bank also successfully refinanced its existing senior unsecured $350 million 7.25% notes due July 2017 last year.
Despite challenges in the raising naira bonds, the expectation is that local currency bonds would remain the favoured option, especially for the mid-cap lenders.
According the report, the options available to the banks are limited in the current macro environment.
“Rights issues would be very dilutive given low share prices while raising tier-2 capital, by issuing long-term dollar subordinated debt, is difficult in as US dollar rates can be so high as to make the exercise unprofitable in terms of spreads on US assets.
“Sourcing naira bonds has also become a tough call given high interest rates on treasury bills and FGN bonds. Despite challenges in raising naira bonds, we believe that local currency bonds still remain the favoured option, especially for the mid-cap lenders, ” it added.
The CBN had tried various means in the past months to reduce the widening gap between interbank and parallel market rates. Despite these measures however, the naira has continued on a depreciatory path in the parallel market, and fell to a historic low of N500 to the dollar last week.
Asset quality also remains a problem for the industry. If a bank suffers an unexpected rise in cost of risk (COR) that exceeds the capacity of one year’s profits to absorb it, then that bank will be looking at writing down capital.
“We examine the potential impact on capital of a sudden surge in CoR and a notional further 20 per cent naira devaluation on capital adequacy. A further 20 per cent devaluation will still leave the banks we cover in this report above regulatory limits, although Diamond just barely. “In our first scenario, which assumes 10 per cent of loans to stressed sectors go bad, Zenith, Guaranty Trust Bank, UBA, Access, and Fidelity remain at comfortable capital levels.
“An unexpected surge in CoR, assuming 20 per cent of these loans go bad, however will take all the banks, with the exception of Access, below regulatory limits,” it added.
ThisDay
By Modupe Gbadeyanka
The Nigeria Revenue Service (NRS) has denied reports that customers performing financial transactions would pay a Value Added Tax (VAT) of 7.5 per cent from January 19, 2026.
Information about this emanated from messages sent out to customers of a financial institution, informing them of the new development in compliance of Nigeria’s new tax laws, especially the Nigeria Tax Act 2025.
It was claimed that Nigerians, as part of efforts of the government to generate more funds from taxes, would begin to pay VAT for the use of banking services like USSD and others.
But reacting in a statement signed by its management on Thursday, January 15, 2026, the tax collecting agency emphasised that the VAT collection for such services was not new.
It stressed that customers have always paid taxes for electronic money transfers and others, as this is charged on the fee, not from the main amount of the transaction.
“The Nigeria Revenue Service wishes to address and correct misleading narratives circulating in sections of the media suggesting that Value Added Tax (VAT has been newly introduced on banking services, fees, commissions, or electronic money transfers. This claim is categorically incorrect.
“VAT has always applied to fees, commissions, and charges for services rendered by banks and other financial institutions under Nigeria’s long-established VAT regime. The Nigeria Tax Act did not introduce VAT on banking charges, nor (sic) did it impose new tax obligation on customers in this regard.
“The Nigeria Revenue Service urges members of the public and all stakeholders to disregard misinformation and to rely exclusively on official communications for accurate, authoritative, and up-to-date tax information,” the statement read.
Business Post reports that what this basically means is that if a customer sends N10,000 and the bank charges N50 for the service, a 7.5 per cent VAT on the N50, which is N3.75, would be paid by the sender, not N750, which is 7.5 per cent of N10,000.
By Adedapo Adesanya
Nigerian-born payments company, Paystack, has announced its entry into the banking sector with the launch of Paystack Microfinance Bank (Paystack MFB) after the acquisition of Ladder Microfinance Bank.
The bank continues Paystack’s push into consumer products and adds a banking layer to its business-focused payment product, coming ten years after the company was founded with the goal of simplifying payments for businesses using modern technology.
In Nigeria alone, the company says its systems process trillions of Naira every month, supporting more than 300,000 businesses and millions of customers. According to Paystack, this growth highlighted a broader need beyond payments, prompting the decision to build a more comprehensive financial offering.
Paystack MFB will begin lending to businesses before expanding to consumers. It will also offer banking-as-a-service (BaaS) products to companies building financial products and treasury management products.
The company explained that while payments are a critical part of the financial journey, businesses and individuals increasingly require a full financial operating system. This includes the ability to store money securely, move funds easily, gain clarity from financial data, and access tools that support long-term growth. Developers, Paystack added, also need reliable, secure, and compliant infrastructure to build new financial solutions efficiently.
To address these needs, Paystack said it has established Paystack Microfinance Bank as a separate and independent entity from Paystack Payments Limited.
The new microfinance bank operates with its own license, governance structure, and product roadmap, although it will work closely with its sister company.
“By adding Paystack MFB to our family of brands, we’re finding the right balance through combining the rapid innovation of a tech-first platform with the stability of traditional banking,” said Ms Amandine Lobelle, Paystack’s chief operating officer.
Last year, it launched its controversial consumer payments app Zap, and now it is taking a step further with the company securing regulatory backing to become a deposit-taking institution. According to a statement, the bank will be guided by the same principles that shaped Paystack’s early success, including reliability, simplicity, transparency, and trust.
Paystack MFB has begun operations with a small group of early members and plans a gradual rollout to more businesses and individuals. The company also announced the opening of a waitlist for interested users and confirmed it is recruiting a dedicated team to help build its long-term banking infrastructure.
By Modupe Gbadeyanka
The Economic and Financial Crimes Commission (EFCC) has helped First Bank of Nigeria to recover the sum of N802.4 million from a suspect, Mr Kingsley Eghosa Ojo, who unlawfully took possession of over N1.3 billion belonging to the bank.
The funds were handed over the financial institution by the Benin Zonal Directorate of the anti-money laundering agency on Monday, January 12, 2026, a statement on Tuesday confirmed.
First Bank approached the EFCC for the recovery of the money through a petition, claiming that the suspect received the money into his account after system glitches.
The commission in its investigation; discovered that the suspect, upon the receipt of the money, transferred a good measure of it to the bank accounts of his mother, Mrs Itohan Ojo and that of his sister, Ms Edith Okoro Osaretin, and committed part of the money to completion of his building project and the funding of a new flamboyant lifestyle.
With the recovery of the money from the identified bank accounts, the EFCC handed it over in drafts to First Bank.
While handing over the lender, the acting Director for the Directorate, Mr Sa’ad Hanafi Sa’ad, stressed his organisation would continue to discharge its mandate effectively in the overall interests of society.
“The EFCC Establishment Act empowers us to trace and recover proceeds of crime and restitute the victim. In this case, First Bank was the victim and that is exactly what we have done.
“We will continue to discharge our duties to ensure that fraudsters do not benefit from fraud and that economic and financial crimes are nipped in the bud,” he said.
In his response, the Business Manager for First Bank in Benin City, Mr Olalere Sunday Ajayi, who received the drafts on behalf of the bank, commended the EFCC for the swiftness and the professionalism it brought to bear in the handling of the matter and expressed the bank’s gratitude to the commission.
He described the EFCC as one of Nigeria’s most effective and reliable institutions.
Meanwhile, Mr Kingsley and all other suspects in the matter have been charged to court for stealing by the EFCC.
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