How To Start A Commercial Bank in Nigeria Starting a bank may sound like a pretty hard business venture; still it isn’t impossible to do. If you fall among the class of people who are dissatisfied with the products some banks offer and would like to start up your own bank. Why not? All you need is patience to follow through all the conditions set by the Central Bank of Nigeria ( CBN) for opening of commercial banks.
Here are some innovative and technology – driven young Nigerians who set out to establish their own banks from scratch in Nigeria.
- Jim Ovia — Zenith Bank PLC
- Pascal Dozie — Diamond Bank PLC
- Tony Elumelu — The now defunct Standard Trust Bank( has been merged with The United Bank of Africa ( UBA))
- Fola Adeola — Guaranty Trust Bank PLC
- Ladi Balogun — First City Monument Bank ( FCMB)
- Mike Adenuga — Equatorial Trust Bank
Do you still think you can’t start and run your own bank? Think again.
Now there are two ways you can own a bank in Nigeria;
- You can either decide to buy a controlling stake in an already existing bank, whether a publicly quoted bank or a private owned bank; or
- To start your own bank from scratch and build it according to your own plans.
This article is however designed to show you how to start your own bank from scratch in Nigeria.
- Your banking experience
You need to have some kind of experience in the banking sector before you start up your own bank; you really can’t afford to just jump in head first. You to be conversant with the technicalities of the banking sector. And you certainly can’t do this through reading books and through random research. You have to be practically involved in the industry. Most of the bank owners listed above where all employees of various banks before they resigned to start their banks. Although so many businesses out there probably don’t require start-ups to have experience; it is necessary to have experience in the banking industry before you start.
2. Understand the financial services sector.
Having a good working knowledge of the financial sector will enable you to have a good head start. You’ve got to know and understand the various indexes, and terminologies involved in the banking industry and financial services sector at large. You don’t have to be a financial professional to gain the knowledge that you need. Enroll for as many professional courses as you can to enable you understand the way things work in this sector.
3. Conduct feasibility studies.
In order to avoid unnecessary hassles when you start; conducting feasibility studies and due diligence is imperative. Bearing in mind that the stakes and huge capital involved in opening a bank in Nigeria is quite high; you want to be able to reduce oversights and mistakes to the barest minimum. Your feasibility study must be centered around the customers and the market, to help you determine its peculiar needs and leverage your products and services to meet such.
4. Obtain and study application procedures.
There are a whole lot of technical requirements involved in opening a bank, which you must meet before you can be granted a license to operate. You will have to approach The Central Bank of Nigeria ( CBN) to obtain all necessary requirements for starting a bank, with a registration form; before you can determine if you are qualified to open a bank, and if not, take steps to meet up with such requirements.
- Appoint a board of directors
Your management board should typically hold five to thirteen people. The board of directors will oversee the initial planning strategies of the bank; and make sure that employees at all levels comply with company policies and government regulations.
- Board members should not be directly involved with the bank; and some of them MUST have previous banking experience.
6. Obtain the required license
Once you’ve been able to meet all that is required of you, you may then go ahead and meet with the CBN so as to obtain your license. And it might take up time before you are granted access to a banking license to operate; majorly because the CBN will carry out due diligence to be sure they are dealing with someone the public can trust. But not to worry; as soon as they determine that fact, you will be granted a license to operate as a bank in Nigeria.
Here are the requirements for obtaining banking license in Nigeria
The 3 stages involved are;
- Grant of approval in principle
- Grant of final license
- Pre-commencement of operation requirement
Grant of approval in principle
You are to submit a formal application for the grant of a license. The application should be addressed to the Governor, Central Bank of Nigeria; accompanied with the following documents:
- A feasibility report of the proposed bank
- A draft copy of the memorandum and Articles of Association of your bank.
- A list of the shareholders, directors, and principal officers of your bank with their particulars.
- The prescribed application fee, and
- Any other documents and reports that the CBN may, from time to time specify.
After providing all these information and documents; all the shareholders will be required to deposit with your bank a sum equal to the minimum paid–up capital.
Upon the payment of the sum, the Governor may issue a license with or without or without conditions, OR refuse to issue a license.
Requirements for Grant of final license
Within 6 months after the Grant of Approval in Principle, you Will be required to submit application for the Grant of a Final license with the following documents;
- Prescribed licensing fee
- 3 certified true copies of Certificate of Incorporation of the bank, Memorandum and Articles of Association, Form CAC 2(Allotment of shares) and Form CAC 7(Particulars of directors) of the bank.
- Evidence of location of head office/branch building for the take-off of banking operations.
- Evidence of strong room, loading bay and banking hall facilities
- Bullion lorries with necessary security gadgets
- Evidence of installation of I.T facilities/ computerization
- Copies of letters of offer and acceptance of employment in respect of the management team.
To get professional help on Writing a Grant Report kindly contact any of our business consultant on 08105636015, 08076359735 or you can send a direct mail to firstname.lastname@example.org
Pre-commencement of operations requirements
After your bank is granted a final license for banking business, you will be required to submit the following documents prior to the commencement of business informing CBN of your readiness to commence operation.
- Evidence of admission into the clearing house
- Copy of shareholders register
- Copy of share certificate issued to each investor
- Draft copy of opening statement of affairs signed by the directors and auditors
- Evidence of insurance coverage and the insurance policies
- Evidence of readiness of cheques and other security documents
- Minutes of pre-commencement board meeting
- Evidence of adequate security arrangements
7. Get your bank registered
Once you’ve been able to acquire your banking license, the next thing to do is getting your bank registered with the corporate affairs commission. You will have to provide a name for your bank and get it registered as your trademark. The corporate affairs commission will request that you present the license you obtained from the CBN along with other important documents.
8. Create a business plan
You may need up to two types of business plans;
- The first one you’ll prepare is meant to attract the initial investors you need to meet the capital requirements.
- The second one should be a more detailed plan and will be used in your applications.
A financial application is required during the application process. And thus could require a three to five year business plan
9. Work with a fantastic legal team
The processes involved in opening a bank can be very tedious and ardous, with many legal regulations that must be followed and applications that must be filled. You will definitely need to hire a great legal team with experience in the financial services sector. Hiring someone familiar with this process can expedite your preparations and help you cover all your bases.
10. Acquiring facilities
Now that you’ve completed all the initial steps and you have been licensed to commence banking operations, the next step is finding a suitable place to acquire a building.
- Find a place with smooth traffic
- Choose a position with a great deal of markets and residential buildings
- Make sure that your bank is located in an area with as little competition as possible
Also ensure that the facility you are leasing is well secured and meets all safety standards.
11. Your marketing strategy
Every business exists, first; for profits. Right? Of what use will your bank business be if you don’t make sales?
Yeah. Your guess is as good as mine. For your bank to be a success; your marketing strategy has to be fierce.
Your marketing and advertising departments must constantly come up with innovative and pitch- perfect products to attract and drive more sales. What keeps the banking industry growing is the innovation and many products they have to offer. Invest your money, your energies, and your skills into this department, and you can be sure to start making huge profits and returns from your bank.
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