Nigeria’s tier-two lenders are moving aggressively to shore up their balance sheets as the Central Bank of Nigeria’s (CBN) March 2026 recapitalisation deadline looms, a new report by SBM Intelligence shows.
The Capital, Competition, and Consolidation report describes the moment as one of the most consequential shifts in two decades, with banks caught between the dominance of Tier-1 rivals and the need to meet sweeping new capital thresholds.
In March 2024, the CBN ordered banks to significantly raise their minimum paid-up capital to N500 billion for international banks, N200 billion for national banks, and N50 billion for regional lenders.
The regulator insists this is not a routine compliance measure but a strategic step to strengthen the sector’s resilience, support Nigeria’s $1 trillion economy ambition, and restore investor confidence.
For Tier-2 banks like Fidelity Bank, FCMB Group, Sterling, and Wema Bank, the challenge is existential: raise capital quickly or risk being swept up in a wave of consolidation.
The report indicates that banks in this category are adopting aggressive strategies to stay competitive.
“Some are pursuing multi-phased capital programmes combining public offers, rights issues, private placements, and asset divestments, while others are tapping both domestic and offshore investors, signalling a determination to remain competitive in a consolidating sector,” it said.
How these banks are raising capital
According to the report, FCMB Group seeks to raise N400 billion in phases, including a N144.6 billion public offer oversubscribed by 33 percent, divestments in subsidiaries, and offshore placements.
“The plan is structured in three phases: a first phase completed in early 2025 that involved a public offer, which raised N144.6 billion and was oversubscribed by 33 percent,” SBM said.
“The group also initiated a convertible note issuance, expected to bring in an additional N20–N40 billion by Q3 2025. A second phase will see a divestment of minority stakes (25–30 percent) in two subsidiaries:Credit Direct Limited and FCMB Pensions Limited, through an Initial Public Offering (IPO) and private placements, targeting proceeds of about N80–N90 billion.
“A final phase will involve private placements with offshore development finance institutions, likely in the form of preference shares or another public offer, aiming to raise the remaining N170 billion.”
Fidelity Bank, on the other hand, has already raised over N270 billion through a heavily oversubscribed public offer and rights issue. With shareholder approval to boost issued share capital from N26.7 billion to N36.7 billion,
“The bank is positioning to exceed the N500 billion requirement, making it one of the most advanced in the recapitalisation race,” it said.
Sterling Financial Holdings has combined private placements and rights issues with a planned $400 million public offer. The multi-stage approach signals its intent to secure a strong capital buffer.
The report added that Wema Bank is combining a N150 billion rights issue with a N50 billion private placement after completing a N40 billion issue in 2023.
Read also: As recapitalisation advances, CBN focuses on bank stability
SBM expects consolidation to accelerate as 2026 approaches, with mergers and alliances likely among tier-2 lenders.
“The financial performance of these mid-tier banks in 2025 underscores their capacity to compete and thrive, even as Tier-1 institutions consolidate their dominance,” the report said.
“FCMB’s robust earnings growth, Fidelity’s exceptional capital market performance, and Wema’s digital-led transformation are emblematic of a sector that is both dynamic and responsive to market realities.
“The ongoing recapitalisation drive is set to reshape the competitive landscape,” the report stated, warning that smaller banks risk being subsumed if they cannot scale up quickly.
Despite challenges such as rising operational costs and foreign exchange volatility, Tier-2 banks have shown strong investor confidence.
“Over the past five years, the share price trajectories of Nigeria’s leading Tier-2 banks—FCMB, Fidelity Bank, Stanbic IBTC, Sterling Bank, and Wema Bank—have reflected both the opportunities and challenges within the country’s evolving financial landscape,” the report said.
Market reactions to the recapitalisation process
SBM said tier-2 banks have shown resilience in the equities market despite the imbalance between the two tiers.
“Fidelity Bank emerged as a standout performer, with its share price surging from N1.65 in 2020 to over N21.20 by mid-2025,” the report added.
“This extraordinary growth—over 1,100 percent in five years—was underpinned by robust earnings, aggressive digital expansion, and successful capital-raising efforts.
“Wema Bank followed a similar trajectory, climbing from N1.50 in 2020 to nearly N15.00 in 2025.
“FCMB and Sterling Bank, while not matching the meteoric rises of Fidelity and Wema, nonetheless posted steady and credible gains.
“FCMB’s share price grew from around N3.33 at the end of 2020 to approximately N9.25 at the end of HY 2025. Sterling Bank’s share price more than tripled over the period, rising from N1.70 to N6.16, buoyed by its focus on retail and SME banking and a disciplined approach to asset quality,” SBM added.
