•Investors bet on winners, losers
By Chinwendu Obienyi
Investor activity on the floor of the Nigerian Exchange Limited (NGX) surged to record levels last week, as the banking sector witnessed an unprecedented N500.76 billion in turnover, its highest in months.
The trading boom, according to market operators, is linked directly to the Central Bank of Nigeria’s (CBN) sweeping recapitalisation directive, which has sparked strong investor interest in banking stocks seen as well-positioned for regulatory compliance.
The recapitalisation framework, announced in March 2024, mandates significant increases in minimum capital requirements: N500 billion for international banks, N200 billion for national banks, and N50 billion for regional players. With a March 2026 compliance deadline, the policy has put Nigerian banks under pressure to strengthen their capital bases through rights issues, mergers, or balance sheet restructuring.
In response, investors are realigning their portfolios to favour tier-1 banks and institutions with visible capital-raising plans. The result is a sharp rise in both share prices and trading volumes in the banking sector.
UBA, which recently announced a N157 billion rights issue, surged to an all-time high of N46.05 per share during the week. FCMB dominated trading volumes with 2.7 billion units, followed by Accesscorp (658.4 million units) and UBA (362 million units). On the value chart, FCMB (N26 billion), Zenith Bank (N21.8 billion), and Accesscorp (N17.5 billion) led the way.
The NGX Banking Index rose by 5.4 per cent week-on-week (w/w), outperforming the broader All-Share Index (ASI), which gained 4.3 per cent to close at 131,585.21 points. Year-to-date (YTD) market returns now stand at 27.8 per cent, up from 22.6 per cent the previous week.
Investors are not only chasing strong fundamentals but also positioning for potential corporate actions including mergers and acquisitions as some banks scramble to meet capital requirements. Head of Research at Lagos-based investment firm, Seyi Akinwunmi, said: “We are seeing early signs of a market realignment where investors are identifying likely winners and vulnerable players in the recapitalisation race. It’s a mix of confidence and speculation, and the banking sector is the epicentre.”
Contributing to the surge in turnover were two significant off-market block trades: FBN Holdings recorded a N323 billion transaction as long-term shareholders Oba Otudeko and Tunde Hassan-Odukale exited their positions; Fidelity Bank also recorded a 1.1 billion unit block trade. These strategic movements signal broader shifts in shareholder structure and potential consolidation under the new capital rules.
Beyond the equity market, the recapitalisation exercise is also expected to enhance financial system stability and support long-term credit expansion. According to the CBN, better-capitalised banks will be more capable of financing large infrastructure and industrial projects, a crucial element of Nigeria’s drive to build a $1 trillion economy.
Still, challenges remain. Mid-tier and smaller banks without clear capital-raising strategies risk losing investor confidence. Analysts warn that some may be forced into mergers or risk downgrades of their operating licenses. “The recap exercise is creating a Darwinian environment, only the strongest, most transparent institutions will survive with full licenses,” Akinwunmi added.
Market watchers also note that while the recapitalisation theme is currently driving optimism, it may eventually lead to consolidation-induced volatility. “There is a lot of money chasing bank stocks now, but once weaker players start announcing restructuring plans, the market could see a wave of repricing,” said another Lagos-based portfolio manager.
For now, however, the sentiment remains overwhelmingly bullish. With capital raising in full swing, dividends expected in the near term, and strong trading momentum, banking stocks appear to be the most attractive asset class on the NGX.
As the CBN capital deadline draws closer, investors are likely to keep rotating capital toward well-capitalised banks with strong compliance signals and credible growth trajectories. The recapitalisation directive has not only reshaped regulatory expectations, it is also rewriting the rules of market engagement.
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