FCMB in trouble after failing to meet Capital Adequacy Ratio

Concerns are growing within the financial sector as it has been revealed that eight prominent Nigerian banks, including Access Bank Plc, Fidelity Bank Plc, First City Monument Bank Limited, First Bank of Nigeria Limited, Guaranty Trust Holding Company Plc, Union Bank of Nigeria Plc, United Bank for Africa Plc, and Zenith Bank Plc, have fallen short of the required Capital Adequacy Ratio (CAR).

This unsettling information emerged from a recent stress test administered by the Central Bank of Nigeria (CBN) to assess the banks’ resilience in the face of adverse economic conditions or shocks.

This revelation follows closely on the heels of the CBN’s consideration of a potential new round of bank recapitalization.

It’s essential to recall that in September 2021, the CBN had issued guidelines mandating National and Regional Banks to maintain a prudential Capital Adequacy Ratio of 10 percent, while banks with international authorization were required to uphold a 15 percent regulatory Capital Adequacy Ratio.

However, the most recent report indicates a significant decline in the overall Capital Adequacy Ratio of the banking system, plummeting by 3.0 percentage points to 11.2 percent.

This figure notably falls below the stipulated 15.0 percent threshold set for banks with international authorization. The downward trend is believed to be linked to the CBN’s review of foreign exchange policies, which initiated the devaluation of the Naira starting from June 14, 2023.
tore confidence in the stability of the Nigerian banking sector.