A decade ago, Nigeria had almost 90 banks. Two rounds of consolidation since then — the first happened in 2005 in response to a hike in capital requirements, while the second came in the wake of the country’s 2009 financial crisis — have seen the number drop to few more than 20. As well as creating lenders with far bigger balance sheets, the changes have resulted in a more concentrated banking sector. The top five lenders in the country, a group comprising Access Bank, First Bank, Guaranty Trust Bank, United Bank for Africa and Zenith, own about 60% of overall assets.
Some foreign investors have suggested Nigeria will soon go the way of South Africa, where the four largest banks have an 85% market share. For them, Nigeria’s mid-tier and small lenders will struggle to survive, and several will be taken over by bigger rivals in the next few years.
