Three Bank Mergers Imminent as Recapitalisation Deadline Nears
Nigeria’s banking sector is heading into a major consolidation phase, with at least three bank mergers expected in early 2026, as smaller lenders race to meet the Central Bank of Nigeria’s (CBN) recapitalisation deadline of March 31, 2026.
Why Mergers Are Becoming Inevitable
According to DataPro’s 2026 Banking Sector Prospects report, most Tier-1 banks have already met the new minimum capital requirements. However, Tier-2 and smaller banks are facing increasing pressure to strengthen their balance sheets, leaving mergers and acquisitions (M&A) as one of the fastest survival options.
By the end of 2025, the recapitalisation push had already intensified, setting the stage for aggressive deal-making in early 2026.
Regulatory Pressure Driving Consolidation
DataPro’s Enterprise Risk Management expert, Idris Shittu, explained that the recapitalisation policy has created an active M&A environment but warned that it comes with significant risks. These include:
• Post-merger integration challenges
• IT system harmonisation
• Cultural clashes between merging banks
• Migration of Non-Performing Loans (NPLs)
Many banks are already holding internal “war room” discussions focused on deal execution, due diligence, and risk mitigation ahead of the deadline.
Three Major Threats Facing Banks in 2026
Shittu highlighted three key pressures banks must navigate this year:
1. Regulatory Tightening:
The 45% Cash Reserve Ratio (CRR) continues to restrict liquidity, limiting banks’ ability to lend.
2. Capital Pressure:
While recapitalisation strengthens the system, it also increases risks around merger execution and operational stability.
3. Technological Disruption:
Fintech firms like Moniepoint and Opay are rapidly capturing SME and retail market share, forcing traditional banks to modernise or lose relevance.
Shift Away from Traditional Lending
Due to liquidity constraints from the high CRR, banks are expected to rely more on fee-based income rather than traditional lending to sustain profitability in 2026.
Rise of Banking ‘Super-Apps’
To compete with fintechs, Nigerian banks are expected to evolve into lifestyle super-apps, integrating services such as:
• Payments
• Flight bookings
• Food delivery
• Everyday digital services
However, legacy IT systems and slow procurement cycles may slow traditional banks, increasing the risk of losing younger customers unless they:
• Acquire fintechs, or
• Create independent digital subsidiaries that operate with fintech-level speed.
Fewer Banks, Bigger Institutions Ahead
DataPro projects that by the end of 2026, the number of banks in Nigeria will decline, resulting in:
• Larger, more resilient banks
• Improved capacity to finance big-ticket transactions
• Better alignment with Nigeria’s ambition of becoming a $1 trillion economy
Still, past consolidation exercises (like 2005) show that poor integration planning can lead to operational failures.
PwC Sees a More Optimistic Outlook
PwC takes a more positive view, noting that:
• Recapitalisation and fintech regulation are attracting institutional investors
• Secondary listings on foreign exchanges are boosting investor confidence
• Capital market growth could reach ₦262 trillion, driven by anticipated listings like Dangote Refinery and NNPC
On technology, PwC expects continued growth in:
• AI and blockchain adoption
• Digital risk management
• Embedded finance and insurtech solutions
Bottom Line
Nigeria’s banking sector in 2026 will be shaped by consolidation, technology, and capital strength. Banks that successfully manage mergers, modernise digitally, and maintain strong governance will be best positioned to survive and grow in the new financial landscape.
Nigeria’s banking sector is heading into a major consolidation phase, with at least three bank mergers expected in early 2026, as smaller lenders race to meet the Central Bank of Nigeria’s (CBN) recapitalisation deadline of March 31, 2026.
Why Mergers Are Becoming Inevitable
According to DataPro’s 2026 Banking Sector Prospects report, most Tier-1 banks have already met the new minimum capital requirements. However, Tier-2 and smaller banks are facing increasing pressure to strengthen their balance sheets, leaving mergers and acquisitions (M&A) as one of the fastest survival options.
By the end of 2025, the recapitalisation push had already intensified, setting the stage for aggressive deal-making in early 2026.
Regulatory Pressure Driving Consolidation
DataPro’s Enterprise Risk Management expert, Idris Shittu, explained that the recapitalisation policy has created an active M&A environment but warned that it comes with significant risks. These include:
• Post-merger integration challenges
• IT system harmonisation
• Cultural clashes between merging banks
• Migration of Non-Performing Loans (NPLs)
Many banks are already holding internal “war room” discussions focused on deal execution, due diligence, and risk mitigation ahead of the deadline.
Three Major Threats Facing Banks in 2026
Shittu highlighted three key pressures banks must navigate this year:
1. Regulatory Tightening:
The 45% Cash Reserve Ratio (CRR) continues to restrict liquidity, limiting banks’ ability to lend.
2. Capital Pressure:
While recapitalisation strengthens the system, it also increases risks around merger execution and operational stability.
3. Technological Disruption:
Fintech firms like Moniepoint and Opay are rapidly capturing SME and retail market share, forcing traditional banks to modernise or lose relevance.
Shift Away from Traditional Lending
Due to liquidity constraints from the high CRR, banks are expected to rely more on fee-based income rather than traditional lending to sustain profitability in 2026.
Rise of Banking ‘Super-Apps’
To compete with fintechs, Nigerian banks are expected to evolve into lifestyle super-apps, integrating services such as:
• Payments
• Flight bookings
• Food delivery
• Everyday digital services
However, legacy IT systems and slow procurement cycles may slow traditional banks, increasing the risk of losing younger customers unless they:
• Acquire fintechs, or
• Create independent digital subsidiaries that operate with fintech-level speed.
Fewer Banks, Bigger Institutions Ahead
DataPro projects that by the end of 2026, the number of banks in Nigeria will decline, resulting in:
• Larger, more resilient banks
• Improved capacity to finance big-ticket transactions
• Better alignment with Nigeria’s ambition of becoming a $1 trillion economy
Still, past consolidation exercises (like 2005) show that poor integration planning can lead to operational failures.
PwC Sees a More Optimistic Outlook
PwC takes a more positive view, noting that:
• Recapitalisation and fintech regulation are attracting institutional investors
• Secondary listings on foreign exchanges are boosting investor confidence
• Capital market growth could reach ₦262 trillion, driven by anticipated listings like Dangote Refinery and NNPC
On technology, PwC expects continued growth in:
• AI and blockchain adoption
• Digital risk management
• Embedded finance and insurtech solutions
Bottom Line
Nigeria’s banking sector in 2026 will be shaped by consolidation, technology, and capital strength. Banks that successfully manage mergers, modernise digitally, and maintain strong governance will be best positioned to survive and grow in the new financial landscape.