By Abubakar Yunusa
DataPro, a credit rating agency, says at least three significant bank mergers are expected by early 2026 as tier-2 lenders scramble to meet the March 31 recapitalisation deadline set by the Central Bank of Nigeria (CBN).
In March 2024, the CBN increased the minimum capital requirement of commercial banks in Nigeria, with a deadline of March 2026.
More than 20 banks have reportedly complied with the directive so far.
In its report, ‘Banking Sector Prospects in Nigeria’, DataPro said Nigeria’s banking sector is approaching a critical inflection point, with regulatory tightening, capital pressure, and technological disruption combining to reshape the industry.
Idris Shittu, DataPro’s enterprise risk management (ERM) analyst, said these forces constitute a “triple threat” that demands strategic agility and operational resilience from banks across the country.
“By the end of 2025, major Banks such as Access, Zenith, GTCO, UBA, FBN and Stanbic IBTC have successfully met the N500 billion minimum capital threshold required by the Central Bank of Nigeria (CBN),” Shittu was quoted as saying in the report.
“Meanwhile, Tier-2 Banks are under increasing pressure to comply, with three significant mergers expected by early 2026 as institutions scramble to meet the March 31 recapitalisation deadline.
“This regulatory push has spurred an active M&A environment, but it brings with it considerable risks.”
According to the report, post-merger integration challenges, such as IT system harmonisation, cultural alignment and the migration of non-performing loans (NPLs), could strain newly merged entities, particularly smaller banks.
The firm said the looming deadline has triggered “war room” discussions across the industry, focused on deal execution and risk mitigation.
The rating agency said the banking sector continues to face severe liquidity constraints, with the cash reserve ratio (CRR) for commercial banks standing at 45 percent.
The report added that the policy effectively sterilises nearly half of naira deposits, limiting banks’ lending capacity and forcing banks to prioritise fee-based income rather than traditional credit creation.
The firm said technological disruption remains a major pressure point, as fintech firms such as Moniepoint and OPay continue to aggressively capture market share, particularly among SMEs and retail customers.
“In response, 2026 is poised to become the year Nigerian Banks evolve beyond traditional banking to compete as lifestyle “super-apps”,” DataPro said.
“These super-apps aim to integrate services such as flight bookings, food delivery, and other daily conveniences directly into banking platforms to enhance customer retention and engagement.”
However, the firm warned that legacy core systems and slow IT procurement processes could hamper traditional banks’ ability to compete, increasing the risk of customer migration to more agile fintech platforms.
To stay competitive, DataPro said banks may pursue fintech acquisitions or spin off autonomous digital subsidiaries capable of operating with greater speed and flexibility.
According to the report, the monetary policy rate (MPR), currently at 27 percent, has pushed prime lending rates to between 32 and 35 percent, placing pressure on borrowers across sectors.
The firm said this has led to a rise in loan restructuring requests, as businesses seek longer tenors to manage repayment obligations amid tight financial conditions.
DataPro said the Nigerian banking sector is likely to shrink by the end of 2026 due to ongoing consolidation.
“While this consolidation promises a more resilient banking system capable of underwriting larger transactions and supporting Nigeria’s ambition toward a $1 trillion economy, integration risks loom large,” the report said.
“Past consolidation efforts, such as those in 2005, highlight the potential pitfalls of IT system failures and cultural clashes.
“Particularly challenging is the merger of conservative Tier-1 banks with aggressive Tier-2 acquirers, which could cause decision-making gridlock and operational disruptions.”
The firm said successful consolidation will depend on effective due diligence around asset quality and cultural fit, as well as robust post-merger integration planning.
