As the recapitalisation deadline set by the Central Bank of Nigeria (CBN) approaches, two national banks are reportedly said to have begun merger talks to meet the regulatory deadline and remain competitive.

More and more banks are facing intense heat, with six banks having about N965 billion funding gap, a prior report by Legit.ng disclosed.

Already, five banks have scaled the recapitalisation hurdle and will proceed with their operations.

The banks are listed as Access Bank, Zenith Bank, Lotus Bank, Ecobank, and Stanbic IBTC Bank.

However, The Sun has quoted sources as sating that two banks, which both hold a national banking licence, have been discreet about the merger talks since the beginning of the second quarter.

The report disclosed that the move would create a stronger mid-tier institution to meet CBN’s new minimum capital of N200 billion for national banks, representing a significant leap from the previous ceiling of N25 billion.

The CBN order gave the banks a 24-month window to recapitalise, with analysts saying that several banks were likely to merge and others were set to have their licences downgraded.

The recapitalisation is part of CBN’s larger effort to build a more resilient and globally competitive banking industry to finance Nigeria $1 trillion GDP target by 2030.

However, several smaller banks are facing challenges in meeting the new threshold and face mergers and acquisitions (M&As). Osas Igho, a financial analyst, has stated that the Nigerian banking industry would be revolutionised at the end of the CBN's exercise.

“At the end of the day, we will have a strong, robust, and globally competitive banking industry.

However, as the deadline nears and more banks are battling to raise the required capital, there may be more mergers and acquisitions. It is too early to tell which banks will merge or be acquired,” he said.

While some tier-1 and tier-2 banks are said to have hit the target, several small players remain far off target.

According to reports, the two banks, which are in secret merger talks, are reluctant to pursue public offers due to high regulatory costs, tough Securities and Exchange Commission (SEC) disclosure rules and investor apathy.

The institutions are said to be assessing synergies, board structure, and shareholder alignment before any formal disclosure.