The March 31 deadline set by CBN Governor Olayemi Cardoso in March 2024 has now passed. Most of Nigeria’s banking sector met it: at least 34 banks raised, merged, or restructured to comply with new minimum capital thresholds that reached N500 billion for international licence holders. Three institutions did not. The question now is what the Central Bank of Nigeria does to each of them — and whether the regulatory power required to force resolution is actually available.
The three non-compliant banks are Polaris Bank, Keystone Bank, and Union Bank. They arrived at this point via different paths. Polaris and Keystone have been under direct CBN intervention since January 2024. Union Bank has a parallel complication: a Federal High Court injunction that limits the CBN’s ability to act on its governance structure, at least until an appeal is decided. Together, they represent the unfinished work of Nigeria’s most consequential banking reform since the Soludo consolidations of 2006.
The Non-Compliant Three
Polaris Bank came under CBN supervisory management in 2019 after Skye Bank’s collapse and was recapitalised using a bridge mechanism. Following its acquisition by a strategic investor in 2022, it struggled to mobilise fresh equity within the new capital timeline. Merger negotiations with Keystone Bank — both under CBN intervention — have been ongoing since mid-2024 but have not produced a completed deal. At the March 31 deadline, no new capital has been raised and no merger has been announced.
Keystone Bank entered CBN intervention in January 2024 following the dissolution of its core investor, Sigma Golf Nigeria Limited, amid allegations of an N20 billion fraud linked to a former senior official. Like Polaris, Keystone remains under supervisory management. Merger talks with Polaris remain exploratory. CBN-appointed management is in place at both institutions, giving the regulator direct operational leverage that it does not have at Union Bank.
Union Bank is the more complicated case. The CBN dissolved its board in January 2024, replacing it with a CBN-appointed management team after shareholders — led by Titan Trust Bank, Luxis International, and Magna International — failed to agree on a capital-raising path acceptable to the regulator. On 25 March 2026, Federal High Court Justice Chukwujekwu Aneke nullified that dissolution, ruling the CBN had exceeded its powers under BOFIA 2020 and ordering the reinstatement of the original board led by Farouk Gumel. The CBN filed a notice of appeal on 26 March and publicly assured depositors that Union Bank remains fully capable of meeting its obligations.
The CBN’s Enforcement Toolkit
Under Section 12(1) of BOFIA 2020, the CBN holds several instruments for dealing with non-compliant institutions. The most severe is licence revocation — the route applied to Heritage Bank in May 2024 after its loan book deteriorated to more than 80 percent non-performing and total loans exceeded customer deposits. The Nigeria Deposit Insurance Corporation assumed the liquidation, paying out insured deposits within days. Heritage Bank remains the only institution the CBN has revoked under the recapitalisation exercise, and for good reason: revocation triggers depositor compensation obligations, reputational risk for the regulator, and systemic uncertainty if the affected bank is large enough.
Below outright revocation, the CBN can downgrade an institution’s licence — moving it from national to regional, or from commercial to merchant bank status — which reduces its activity scope and capital threshold. It can place an institution under conservatorship, extending and deepening the supervisory management it has already applied to Polaris and Keystone. And it can use directed consolidation: formally mandating a merger rather than facilitating an organic one.
For Polaris and Keystone, directed merger is the most likely outcome. The CBN already controls both institutions via appointed management and has no obvious interest in a second Heritage Bank-style revocation affecting depositors at scale. A directed Polaris–Keystone combination — structured similarly to the Unity Bank–Providus merger, which was approved in August 2024 and completed in September 2025 — would create a mid-tier bank with sufficient capital to meet at least the regional licence threshold. The question is sequencing: does the CBN issue a formal merger order, or continue to apply supervisory pressure until a voluntary deal closes?
The Union Bank Constraint
The court injunction at Union Bank changes the enforcement calculus in a way that the Polaris and Keystone situations do not. If the Federal High Court ruling stands through the appeals process, CBN-appointed management may be required to stand down in favour of the reinstated board — the same board the regulator removed for failing to execute a capital plan. That board has signalled it wishes to contest the CBN’s intervention, not cooperate with it.
The CBN’s appeal does not automatically stay the lower court order. Unless a stay is granted pending the appeal, the original Gumel-led board may have legal grounds to resume operations. That scenario does not prevent the CBN from taking other enforcement action — it retains its supervisory mandate — but it severely complicates the governance structure of any merger process.
Banking lawyers familiar with the BOFIA framework note that the Act gives the CBN broad powers to intervene in institutions it considers systemically important, but the Union Bank ruling tests how those powers interact with shareholder rights and judicial review. The appeal, likely to land before the Court of Appeal in Lagos, will set a precedent that matters not just for Union Bank but for the entire scope of CBN supervisory authority. That process could take months. In the meantime, Union Bank sits in a governance limbo that neither the regulator nor its shareholders can easily resolve.
What the Post-Consolidation Map Looks Like
If the Polaris–Keystone merger closes — by directive or otherwise — and Union Bank reaches a resolution with its original shareholders or is absorbed into another institution, Nigeria’s banking sector would emerge from this exercise with approximately 30 to 32 operational banks, down from 38 before the recapitalisation process began. The top five institutions — Access Bank, Zenith Bank, GTCO, FBN Holdings/First Bank, and UBA — would control an even larger share of sector assets than they did before the exercise started.
The CBN’s stated rationale for the exercise was strengthening the banking system to underwrite large-scale infrastructure financing and absorb external shocks. That goal is structurally advanced by higher capital floors. Whether the concentration trade-off — fewer, larger banks — creates new stability risks is a question that will be tested in the next credit downturn, not in a regulatory enforcement table.
For now, the governor’s immediate task is closing the three open files. Two of them — Polaris and Keystone — are within his direct power to resolve. The third has moved into the courts. The CBN came out of this exercise having raised N4.61 trillion in new sector capital. The final act is messier than the headline suggests. It usually is.
