Banking in Nigeria

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The banking industry in Nigeria started during the colonial era with the establishment of Colonial Banks, with the primary aim of meeting the commercial needs of the Colonial Government.[1] The banking system in Nigeria is regulated through the Central Bank of Nigeria. This apex bank started operation on July 1, 1959.


In 1892, the African Banking Corporation and British West Africa, now First Bank of Nigeria, were established in Nigeria. In 1925, the Anglo-Egyptian Bank and National Bank of South Africa gave birth to Barclays Bank in Nigeria. In 1948, the British and French Bank for Commerce and Industry started operations in Nigeria, which metamorphosed into the United Bank for Africa.[2] The first domestic bank In Nigeria was established in 1929 and called Industrial and Commercial Bank. The bank liquidated in 1930 and was replaced by Mercantile Bank in 1931. The African Continental Bank was created in 1949 as the only sustainable indigenous bank after the liquidation of the Industrial and Commercial Bank.[3] The year 1947 shows the emergence of an agricultural bank called the Nigerian Farmers and Commercial Bank.

The modified universal banking model[edit]

In 2010, the Central Bank of Nigeria re-modified the existing universal banking model that permits the holder of a commercial banking license to operate in other non-core banking, either directly or indirectly through designated subsidiaries.[4] The introduction of this scheme classifies banking licenses into commercial, Merchant and Specialised/Development Banking Licenses.[5][6]

Nigeria banking reform[edit]

Nigeria banking reform can be divided into two main phases, 2004 and 2009. Each phase had significant economic effects:

Banking Reform of 2004 and its effect[edit]

This reform focused on bank consolidation through the mechanism of merger and acquisition.[7] This resulted in rebasing of commercial banks from ₦2 billion to ₦25 billion, while the 89 existing commercial banks in the country became 25.

The apex bank apart from capitalization also invested in banking automation which enhances banking returns. The reform established a reporting portal for bank customers for the purpose of information sharing. Under this reform, deposits from public sectors and government-owned agencies can be collected by the commercial banks in order to enhance their level of liquidity.[8][9]

Banking Reform of 2009 and its effect[edit]

The Asset Management Corporation of Nigeria AMCON was established in 2009 by the National Assembly of Nigeria.[10] The institution acquires non-performing loans of commercial banks. The financing of AMCON is composed of a ₦50 billion CBN fund and 0.3% of total assets of participating commercial banks. It also supports the implementation of International Financial Reporting Standards (IFRS) for global reporting compliance in terms of reporting. This reform reviewed the universal banking model by restricting commercial banks to banking activities only. The reform also addresses excessive banking interest by the creation of a non-interest bank.[11][12][13][14]

Sarah Alade, Deputy Governor of the Central Bank of Nigeria, announced that five Nigerian bank CEOs were being dismissed in August 2009. Five replacements were named with immediate effect including Funke Osibodu to lead the Union Bank of Nigeria and Suzanne Iroche who took over as CEO of FinBank.[15]

See also[edit]


  2. ^ Richard L. Sklar. "Nigeria political parties: power in an emergent African nation". Retrieved 29 October 2015.
  3. ^ Walter Tessier Newlyn, David Culloden Rowan. "Money and banking in British Colonial Africa: a study of the monetary and banking systems of eight British African territories". Clarendon Press. Retrieved 29 November 2015.
  4. ^ Samule A. Oni. "CIRCULAR ON THE REVIEW OF THE UNIVERSAL BANKING MODEL" (PDF). Retrieved 29 November 2015.
  5. ^ Omoh Gabriel. "CBN to introduce three types of banks in 2011".
  6. ^ Omoh Gabriel. "CBN releases guidelines for new banking model". Vanguard Newspaper. Retrieved 29 November 2015.
  7. ^ Sanusi Lamido Sanusi. "Banking reform and its impact on the Nigerian economy" (PDF). Retrieved 29 November 2015.
  8. ^ Abel Ezeoha. "Structural effects of banking industry consolidation in Nigeria: A review". Journal of Banking Regulation. Palgrave Macmillan. Retrieved 29 November 2015.
  9. ^ Duncan Alfor. "Nigerian banking reform: Recent actions and future prospects". proshare. Retrieved 29 November 2015.
  10. ^ Uchechukwu Okoroji. "Nigeria's Banking Reform above the Curve". This Day Live. Archived from the original on 20 May 2013. Retrieved 29 November 2015.
  11. ^ Adekunle. "Jaiz Bank spends N100m on IDP". Vanguard. Retrieved 29 November 2015.
  12. ^ Mathias Okwe. "Jaiz Bank enters profit-making territory, declares N158m for shareholders". The Guardian. Retrieved 29 November 2015.
  13. ^
  14. ^ Sanusi, Lamido (2012). BANKING REFORM AND ITS IMPACT ON THE NIGERIAN ECONOMY. Lagos: Research Dept of the Central Bank of Nigeria. pp. 5–10.
  15. ^ CBN sacks 5 banks' directors, Gabriel Omoh and Babajide Komolafe, 14 August 2009, VanguardNGR, Retrieved 23 February 2016