CBN Deadline Pushes Four Nigerian Banks Into Merger Talks

Four Nigerian banks are under growing pressure as the Central Bank of Nigeria’s recapitalisation deadline of March 2026 draws closer. With time running out, merger talks, ownership changes, and fresh capital searches have intensified, signalling a new round of consolidation in the banking sector.

The CBN’s new capital requirements are forcing banks with weaker balance sheets or unresolved internal issues to make hard choices. 

For some, raising fresh funds independently may no longer be realistic. For others, mergers and strategic partnerships now offer the clearest path to survival and relevance.

Industry analysts say the next few months could reshape Nigeria’s banking landscape, especially among mid-sized and smaller lenders.

Union Bank sees fresh interest but legal issues remain

Union Bank is once again attracting attention from foreign investors, with interest reportedly coming from the Middle East. Discussions around a fresh capital injection are said to be ongoing, suggesting renewed confidence in the bank’s core business and long-term value.

However, progress has been slowed by an unresolved legal dispute linked to a former major shareholder. Market watchers say this case is a major hurdle. Until it is settled, Union Bank may struggle to finalise any recapitalisation or ownership restructuring before the March deadline. Analysts note that time is critical. 

A delayed resolution could weaken the bank’s negotiating position or force more drastic measures as the deadline approaches.

Keystone Bank draws investor attention

Keystone Bank is also in the spotlight, with reports of competing bids and rising investor interest. A local investor group is believed to be seeking preferred-bidder status, reflecting growing domestic confidence in Nigeria’s banking sector.

Still, concerns remain about whether local investors alone can raise enough clean capital to meet regulatory thresholds. Some market sources suggest a structure involving foreign partners could emerge, although current discussions appear focused on domestic participation.

The final outcome will likely depend on how quickly investors can demonstrate financial capacity and secure regulatory approval.

Unity Bank and Providus move closer to a merger

Among the four banks, Unity Bank appears to be the furthest along in its recapitalisation strategy. Talks with Providus Bank have reportedly advanced, with both sides aligning on capital structure and regulatory requirements.

Unlike earlier merger attempts in the sector, this deal is said to be on firmer ground. A pending shareholder legal challenge is expected to be resolved before the CBN deadline, possibly within weeks. If that happens, the merger could move quickly.

A combined Unity, Providus entity would create a stronger institution with improved capital depth and a more competitive market position.

Polaris Bank explores strategic options

Polaris Bank is widely expected to pursue either an investor-led recapitalisation or a merger with another mid-tier lender. Market speculation has pointed to a possible tie-up with a Tier-2 bank, a move that could support operational scale and balance-sheet strength.

While no deal has been confirmed, analysts say Polaris has limited room to delay decisions. The bank will need a clear and credible plan to meet the new capital rules or risk being left behind.

A turning point for Nigeria’s banking sector

Beyond these four banks, the recapitalisation push is triggering broader conversations across the financial system. 

Some discussions reportedly involve financial holding companies, while others touch on bank-led investments in energy and infrastructure as lenders look to strengthen earnings and diversify risk.

Market analysts say the CBN has signalled openness to mergers and acquisitions, especially for banks with weak or negative shareholder funds. 

The goal, they say, is not punishment but stability, building fewer, stronger institutions that can support economic growth.

Most top-tier banks have already met the revised capital requirements. The real pressure is now on smaller lenders, many of whom are racing against time.

With less than three months to the deadline, Nigeria’s banking sector is entering one of its most decisive moments in decades. For some banks, mergers may offer a fresh start. For others, failure to act could mean fading into irrelevance in a post-recapitalisation era.