INTRODUCTION

The Nigerian banking sector has just concluded its most consequential restructuring since the landmark 2004 consolidation under former CBN Governor, Professor Charles Soludo. That earlier exercise reduced the number of banks from 89 to 25 and laid the foundation for a stronger industry. The 2024–2026 recapitalisation exercise was no less ambitious in its design or its outcome. Announced by the Central Bank of Nigeria (“CBN“) through its circular of 28 March 2024, the exercise drew its legal authority from Section 9 of the Banks and Other Financial Institutions Act 2020 (“BOFIA 2020”), which specifically empowers the CBN to set minimum capital requirements for banks. The thresholds prescribed were differentiated by licence category: ₦500 billion for international commercial banks; ₦200 billion for national commercial banks; ₦50 billion for regional commercial banks and national merchant banks; ₦20 billion for national non-interest banks; and ₦10 billion for regional non-interest banks. The rationale behind this policy is to build a strong financial system that can weather any economic storm, enhance the lending capacity of banks, safeguard capital against the diminishing effects of inflation and support the government’s 1 trillion-dollar economy by the year 2030.

This article examines the post-deadline legal landscape: the obligations that survive the deadline for non-compliant institutions; how incomplete merger arrangements interact with the requirements of CAMA 2020; what the Investment and Securities Act 2025 (“ISA 2025“) means for bank M&A deal structures going forward; and the licence revocation procedure that looms as the ultimate consequence of continued non-compliance. This article is intended to serve as a practical guide for transactional lawyers, bankers, and investors navigating the post-recapitalisation M&A market.

WHAT HAPPENS TO THE BANKS THAT MISSED THE DEADLINE?

By the close of 31 March 2026, 33 banks had met the revised minimum capital requirements, raising a cumulative total of ₦4.65 trillion in new equity capital over the 24-month period. The tier-one banks led the charge, with Access Holdings, Zenith Bank, GTCO, First HoldCo, and United Bank for Africa surpassing their respective thresholds through combinations of rights issues, public offers, and private placements. For all the scale of this achievement, however, the exercise did not conclude cleanly. Some banks, including Union Bank of Nigeria, Polaris Bank, and Keystone Bank, failed to meet the deadline and are under intervention. Several merger arrangements initiated during the recapitalisation window remain legally incomplete.

Banks that fail to meet the recapitalisation deadline may, by implication, face a downgrade of their licences to categories that align with their existing capital base. Where a bank does not voluntarily seek such a downgrade by applying to the Central Bank of Nigeria (CBN), the regulator retains the power to suspend or revoke its licence. A downgrade permits the bank to continue operations, albeit within a narrower scope consistent with the requirements of the new licence category.

In some cases, smaller banks that are unable to meet the revised capital thresholds may be compelled to exit the market altogether. Others may become subject to regulatory-induced consolidation, including forced mergers or structured acquisitions facilitated by the CBN to mitigate systemic risk. In situations where a bank remains viable but distressed, the CBN may remove existing management and appoint an interim team to stabilise operations. Alternatively, the regulator may establish a bridge bank to assume the failing institution’s operations or require a stronger bank to acquire it in order to safeguard depositors’ funds. As a final measure, resolution mechanisms may involve the intervention of the Nigeria Deposit Insurance Corporation (NDIC) or the Asset Management Corporation of Nigeria (AMCON), which may step in to manage distressed assets or facilitate an orderly resolution of the bank.

THE THREE BANKS IN LIMBO: WHAT ACTUALLY HAPPENED

The non-compliance of Union Bank, Polaris Bank, and Keystone Bank did not arise from the recapitalisation exercise in isolation. Their situation is the product of pre-existing regulatory and judicial entanglements that preceded the March 2026 deadline and which the CBN could not simply override. As far back as 2024, the CBN dissolved the boards and management of all three banks, citing infractions of Section 12(c), (f), (g), and (h) of BOFIA 2020. The cited infractions included regulatory non-compliance, corporate governance failure, disregard of the conditions under which their licences were granted, and involvement in activities posing a threat to financial stability.

Each bank’s situation has since taken on its own distinct legal character. For Keystone Bank, the ownership question became deeply complicated when the Lagos State High Court, Ikeja, on 11 February 2025, ordered the forfeiture of shares previously held by the bank’s shareholders in favour of the Federal Government, following a lawsuit by the Economic and Financial Crimes Commission (“EFCC“) challenging the acquisition of the lender by its former owners. For Union Bank, matters took a different turn when a Federal High Court in Lagos invalidated the CBN’s dissolution of the bank’s board and former owners. The CBN has maintained that its action was within the bounds of its mandate and that the status of Union Bank under its management has not changed. The CBN has, in addition, approached the Court of Appeal to overturn the ruling, arguing that its intervention was necessary to prevent a systemic financial collapse.

Despite all of this, the CBN’s public posture toward the three banks has been measured rather than confrontational. The Director of Banking Supervision, Dr. Olubukola Akinwunmi, confirmed that the three banks have the capacity to raise the required capital and are actively in the process of doing so, but that judicial and regulatory processes must be satisfactorily addressed before the capital-raising can be concluded. Once those processes are resolved, the banks will return to recapitalisation in line with the minimum capital requirements stipulated by the apex bank. Depositors of the affected institutions have been assured that their funds remain secure and that banking services continue uninterrupted.

LEGAL OBLIGATIONS THAT SURVIVE THE DEADLINE

The expiry of the 31 March 2026 deadline does not extinguish the recapitalisation obligations of non-compliant banks. Section 9(2) of BOFIA 2020 empowers the CBN to revoke banking licences for non-compliance. In the present circumstances, the CBN has indicated a preference for an orderly resolution of the outstanding legal and regulatory processes before exercising that power. Consistent with this approach, the CBN Governor had earlier stated that non-compliant banks may have their authorisation licences downgraded or be subjected to mergers, without immediate risk to deposits.

A licence downgrade, it must be emphasised, is not a minor administrative matter. A bank operating under a national licence that is downgraded to a regional licence loses its authorisation to operate outside its designated geographic region. The practical consequences include the forced closure of out-of-region branches, the withdrawal of certain product authorisations, and a significant reduction in competitive standing.

There is also a more immediate structural concern. The recapitalisation process requires banks to obtain board and shareholders’ approval, with board resolutions and shareholders’ resolutions being among the key documents submitted to the CBN and SEC in any request for recapitalisation approval. For the three intervention banks, where CBN-appointed management is itself the subject of ongoing litigation, the authority of that management to bind the institution in any major corporate transaction whether a rights issue, a private placement, or a scheme of merger is a live legal risk that must be squarely addressed before any transaction is structured or signed.

INCOMPLETE MERGERS AND THE CAMA 2020 FRAMEWORK

Several bank mergers initiated during the recapitalisation window remain procedurally incomplete as at the deadline. The merger between Unity Bank and Providus Bank is among the most publicly documented. The proposed merger is to be effected through a Scheme of Merger pursuant to Section 711 of CAMA 2020. Prior to presenting the scheme for shareholder approval, the parties obtained an Approval-in-Principle from the CBN and a No Objection from the SEC. The outstanding steps are an application to the Federal High Court for the sanctioning of the scheme, final CBN approval, and formal SEC approval.

The procedural requirements that govern this process are precise and non-negotiable. Under Section 711 of CAMA 2020, the scheme must be approved by members representing at least three-quarters in value of the shares of those present and voting at a court-ordered meeting. Once approved, the court may sanction the scheme, and the sanction must be filed at the Corporate Affairs Commission (“CAC“) within seven days. Where, however, a merger is structured under Section 715 of CAMA 2020 rather than Section 711, a more demanding regime applies. Section 711 does not empower the court to refer the scheme to the SEC to consider its fairness but Section 715 does. Schemes structured under Section 715 can therefore be referred by the court to the SEC, and such schemes do not become effective until the court order sanctioning the scheme has been filed at the CAC.

The courts have demonstrated an increasing willingness to scrutinise merger transactions for fairness to minority shareholders. In Oando Plc v. Securities and Exchange Commission (Suit No. FHC/L/CS/965/2019), the Court of Appeal ruled that the SEC’s approval of a merger was unlawful due to insufficient evaluation of the merger’s impact on minority shareholders and unfavourable terms for existing shareholders. This decision is instructive for any transaction counsel advising on a post-recapitalisation bank merger: the fairness of the scheme to all shareholders is not a box-ticking exercise. It is a substantive legal requirement that, if inadequately addressed, can unravel a transaction even after regulatory approvals have been obtained.

The practical lesson is equally important. Any merger arrangement that was commenced but not finalised before the deadline remains fully subject to these statutory requirements. Regulatory urgency is not a substitute for statutory compliance. A purported scheme of merger that bypasses CBN final approval, Federal High Court sanction, or CAC filing has no legal effect and is susceptible to challenge by any aggrieved party.

THE ISA 2025: A NEW REGULATORY LAYER FOR EVERY BANK M&A DEAL

The ISA 2025 has materially altered the regulatory landscape for bank M&A transactions. Its significance for the post-recapitalisation environment is considerable. It requires that prior approval of the SEC be obtained for any corporate restructuring that results in a material change in a public company’s business direction or policy, including mergers and takeovers of public companies, with the overarching aim of ensuring that such transactions are carried out fairly, transparently, and in the best interests of shareholders and the wider economy. Importantly, the SEC’s approving authority under the ISA 2025 is without prejudice to the powers of other financial market regulators, including the CBN, National Insurance Commission (NAICOM), National Pension Commission (PENCOM), and the Federal Competition and Consumer Protection Commission (FCCPC).

In practical terms, a bank merger arising from the recapitalisation exercise must navigate approval from the CBN as sectoral regulator, the SEC as capital markets regulator, and potentially the FCCPC where competition thresholds are engaged. The ISA 2025 prescribes delineated structured filing phases pre-merger notification, formal approval, post-approval paperwork, takeover bid registration, and post-takeover submissions each with defined requirements for documents, timelines, and fees. This level of procedural detail was entirely absent under the ISA 2007, and it demands that transaction timetables be structured from the outset to accommodate each regulatory stage rather than treating approvals as a concurrent process.

There is also a material new dimension of personal liability that must be understood. Section 147 of the ISA 2025 criminalises the provision of false or misleading information, omissions of material facts, and deceptive conduct in connection with mergers, takeovers, or other restructuring. It imposes a minimum fine of ₦5 million, imprisonment of up to five years, or both. In addition, the SEC is empowered to impose administrative fines of ₦10 million or more, in lieu of prosecution. The preparation of disclosure documents is no longer merely a capital markets compliance exercise. It is an exercise in which deficient or misleading disclosure attracts direct criminal exposure both for the institution and for the individual professionals who sign off on it.

CONCLUSION

In conclusion, the 31 March 2026 recapitalisation deadline marks the beginning, not the end, of the substantive legal work in this space. The three banks in regulatory and judicial limbo Union Bank of Nigeria, Polaris Bank, and Keystone Bank present a demanding intersection of BOFIA 2020 supervisory powers, contested corporate authority, and unresolved litigation, all of which must be navigated before their recapitalisation can be completed. For the broader M&A market, incomplete merger arrangements remain bound by the full procedural requirements of CAMA 2020, including Federal High Court sanction and CAC filing, and cannot be short-circuited by reference to regulatory deadlines. The ISA 2025 has further introduced a multi-regulator approval framework, with structured filing obligations at each stage and criminal sanctions for misleading disclosures. Transactional lawyers, bankers, and investors who understand this layered legal environment are well-positioned to capitalise on the significant opportunities that this historic restructuring has created. Those who do not will find that the new framework provides regulators with more than sufficient tools to enforce compliance and that the personal cost of getting it wrong is both real and significant.