The financial services sector is generally divided into different sub-sectors namely the banking, insurance, capital market, Fintechs, etc. Since time immemorial, the financial services sector has had its core component to be the banking sub-sector. This sector ensures easy access and use of money in its physical form without transforming it into other financial assets such as digital assets, securities, bonds, shares, equities, or insurance policies.

Credence is naturally accorded to America, India, and Egypt for commencing the regulation of the financial service sectors in the 18th century hence, bringing an end to the free banking era that brought a lot of havoc in the economies of nations.

In Nigeria, the Banking Ordinance of 1952 marked the beginning of regulation with remarkable requirements for minimum paid-up capital and reserve funds requirement. Even though this was not enough to solve the many challenges of lawlessness in the sector, it stretched the backs of players in the sector who sat up and started running their businesses with more care and intentionality.

Other landmark regulations included a further increase in the minimum paid-up capital, empowerment of the Central Bank of Nigeria to state deposit ratio, structural control, risk management control, moderation of conduct of players, establishing quantitative indices of performances, and placing restrictions on loans. With several reviews following the Banking Ordinance of 1952, we now have the CBN Act 2007 and the Banks and Other Financial Institutions Act (BOFIA) 2020 regulating all financial activities.

Definition and Regulators:

Banks refer to financial institutions that deliver financial services such as opening designated accounts (savings, current, or fixed), accepting deposits, certificates of deposit (CDs), loans, forex trading, wealth management, currency exchange, financial advisory services, individual retirement accounts (IRAs), and safe deposit boxes etc to all and sundry. The regulators include but not limited to Central Bank of Nigeria (CBN)), Nigeria Deposit Insurance Commission (NDIC), Financial Reporting Council (FRC) Corporate Affairs Commission (CAC), Nigerian Communications Commission (NCC), National Information Technology Development Agency (NITDA), Federal Competition and Consumer Protection Commission (FCCPC), Federal Inland Revenue Services (FIRS), National Office for Technology Acquisition and Promotion (NOTAP), etc.

Types of Banks obtainable in Nigeria:

Banks are categorized based on the type of activities they carry out, their geographical reach, and the license they operate under. The operating license is issued by the Central Bank of Nigeria and it serves as the regulator that carries out major oversight of all banking activities across the country. The various types of registrable banks in Nigeria include:

  1. Commercial banks
  2. Non-interest banks
  3. Merchant banks
  4. Microfinance banks
  5. Mortgage banks


This banking license is categorized as follows::

  • International license: The holder of this license is permitted to operate and have branches across all states in Nigeria as well as maintain offshore banking operations in jurisdictions of its choice. However, this is subject to CBN approval. The minimum paid-up share capital is Five Hundred Billion Naira (N500,000,000,000.00).
  • National license: The holder of this license is permitted to operate and have branches across all states in Nigeria. The minimum paid-up share capital is Two Hundred Billion Naira (N200,000,000,000.00).
  • Regional license: The holder of this license is permitted to operate and have a minimum of Six (6) and a maximum of Twelve (12) branches across two (2) geo-political zones as well as the Federal Capital Territory. The minimum paid-up share capital is Fifty Billion Naira (N50,000,000,000.00).Examples: First City Monument Bank Plc, Access Bank Plc, Guaranty Trust Bank Plc, United Bank For Africa Plc, etc.

Permissible Activities:

  • Accept deposits, and maintain current, savings, and fixed accounts.
  • provide retail banking services including mortgage products, credit facilities, and foreign exchange trading, and serve as a settlement bank.
  • Undertake treasury management such as money market, fixed income, and foreign exchange investment.
  • Provide custodial services.
  • Carry out financial advisory services.
  • Engage in non-convertible debt instruments and services.
  • Provide non-interest banking services subject to CBN approval.

Non permissible Activities.

  • Issuing of currency.
  • Insurance underwriting or re-insurance services.
  • Provision of financial advisory for a fee or engage in loss adjusting services.
  • Asset Management services, Issuing House, and Capital Market underwriting services.
  • Investment in equity or hybrid-equity instruments except for allowed investments under BOFIA.
  • Proprietary trading, save as permitted by these Regulations.


This bank focuses on providing trading, investment, and commercial activities that conform with Islamic commercial jurisprudence without charging interests. It engages in partnership agreements, leasing, hire purchase, and other trade contracts. It prevents uncertainty or speculative behavior in business transactions such as is obtainable in gambling activities. The financing provided must be linked to real assets and returns must be linked to risk. The license category is divided into:

  • Regional license: The minimum paid-up share capital is Ten Billion Naira (N10,000,000,000.00).
  • National license: The minimum paid-up share capital is Twenty Billion Naira (N20,000,000,000.00).Examples: Lotus Bank, Jaiz Bank Limited, TAJ Bank Plc etc.

Permissible Activities:

  • Provision of financial services available in commercial banks using profit and loss sharing instead of charging interests.

Non permissible Activities.

  • Funding of unethical activities such as manufacturing of ammunition, alcohol, narcotics, etc.
  • Exploitation or unfair trade practices.
  • Ambiguous or speculative terms in transactions.
  • Unjust enrichment.
  • Gambling.


This bank focuses on lending, trust, fund and portfolio management, investment management, asset and project financing, fundraising, loan syndication, financial advisory, and underwriting for companies and high-net-worth individuals. They do not focus on meeting the financial needs of the general public. The minimum paid-up share capital is Fifty Billion Naira (N50,000,000,000.00).

Examples: FSDH Merchant Bank Ltd, FBN Merchant Bank, Coronation Merchant Bank Limited, etc.

Permissible Activities:

  • Accept deposits which is a minimum of One Hundred Million Naira (N100,000,000.00) per tranche.
  • Engage in debt factoring services and asset finance.
  • Provide finance and credit facilities to non-retail customers.
  • Engage in discounting, and rediscounting negotiable instruments.
  • Act as an issuing house for managing, arranging, and coordinating the issuance of securities.
  • Provide financial consultancy and advisory services relating to corporate and investment matters for a fee.
  • Deal in foreign exchange and provide foreign exchange services, custodial services, underwriting ( in respect of equity issuance), and treasury management services.

Non-permissible Activities:

  • Cannot accept any deposit withdrawable by cheque.
  • Cannot grant retail loans or engage in any form of retail banking.
  • Should not hold for more than six months any equity interest acquired in a company while managing an equity issue.;
  • Should not engage in Insurance underwriting services, Loss adjusting services, Reinsurance services, and other insurance-related services.


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This focuses on providing financial services to low-income households; the unbanked and underserved communities; informal sector operators, micro-entrepreneurs, and subsistence farmers across Nigeria. The registrable operating license is categorized as follows:

  1. Tier 1- They are allowed to operate in urban areas with one (1) head office and a maximum of four (4) branches in five (5) local government areas within the state where they operate. The minimum paid-up share capital is Two Hundred Million Shares (N200,000,000.00).
  2. Tier 2- They are allowed to operate in rural areas with one (1) head office and one (1) branch office in one (1) Local Government Area within the state where they operate. The minimum paid-up share capital is Fifty Million Naira (N50,000,000.00).
  3. State license- They are allowed to operate in a state with one (1) head office and Ten (10) branches across the state. At least one (1) branch must be in each local government with a maximum of two (2) branches. This rule is to help avoid a cluster in one particular location while other laces are deprived of financial services. The minimum paid-up share capital is One Billion Naira (N1,000,000,000.00)
  4. National license- They are allowed to operate one (1) head office and Ten (10) branches across the country. They can only have (1) one branch in each state across the country before other branches can be opened in a state that already has a branch of their office. The minimum paid-up share capital is Five Billion Naira (N5,000,000,000.00).Examples: Fair Money MFB, Moniepoint MFB, etc.

Permissible Activities:

  • Accept deposits.
  • Provide credit.
  • Provide housing microloans.
  • Act as agent for the provision of mobile banking, and micro insurance and engage in agency banking.
  • Issue debentures to interested parties to raise funds from members of the public.
  • Engage in agency banking.
  • Provide capacity building on record keeping, small business management, and safe custody.

Non- Permissible Activities:

  • Carry out foreign exchange transactions except foreign exchange borrowings.
  • Engage in real estate except for use as office accommodation.
  • Engage in clearing house activities.
  • Collection of third-party cheques and other instruments.
  • Financing of illegal activities.
  • International electronic transfers.


This bank focuses on the provision of mortgage loans to clients who repay in installments. The license category is divided into:

  1. State license: The minimum paid-up share capital is Two Billion Five Hundred Million Naira (N2,500,000,000.00).
  2. National license: The minimum paid-up share capital is Five Billion Naira (N5,000,000,000.00).Examples: Abbey Mortgage Bank Plc, AG Homes Savings & Loan’s Limited, ASO mortgage bank, etc.

Permissible Activities:

  • Perform financial analysis and provide advisory for mortgage customers.
  • Finance Mortgages.
  • Real estate construction finance within the permitted limits.
  • Acceptance of savings and time\term deposits.
  • Acceptance of mortgage-focused demand deposits.
  • Drawing from mortgage funds (e.g. National Housing Fund Facility) for on-lending.

Non permissible Activities.

  • Grant consumer or commercial loans.
  • Leasing.
  • Estate agency or facilities management.
  • Project management for real estate development.
  • Management of pension funds/schemes.


The Central Bank of Nigeria is making great strides in improving how financial services are pushed out to meet the needs of all citizens by supporting, regulating, and protecting the banking sector while creating policies that allow for innovative ways of doing business. With the emergence of new technologies, the coming decades will birth different variations of banks in Nigeria with more categories being created to allow for more access by underserved communities. Until then, be guided by this article as to the current types of banks in Nigeria.



What are the types of banks in Nigeria? ›

The Central Bank of Nigeria supervises the following categories of financial institutions:
  • Commercial Banks.
  • Development Finance Institutions (DFI's)
  • Discount Houses.
  • Finance Companies (FCs)
  • Holding Company (HCs)
  • Merchant Banks.
  • Micro-finance Banks (MFBs)
  • Non-Interest Banks.

What is a bank and explain the various types of bank? ›

Key Takeaways. A bank is a financial institution licensed to receive deposits and make loans. There are several types of banks including retail, commercial, and investment banks. In most countries, banks are regulated by the national government or central bank.

What is the difference between Tier 1 and Tier 2 banks in Nigeria? ›

Tier 1 accounts allow you daily transactions of N50,000 (yes, inflow and outflow) and the account can hold a total of N300,000. Tier 2 accounts allow you daily transactions of N200,000 (that's both inflow and outflow) and the account can hold a total of N500,000. A Tier 3 account is the best place to be 😉.

What are the three important banks in Nigeria? ›

FUGAZ (which is an acronym for FBNH, UBA, GT Bank, Access Bank and Zenith Bank) is Nigeria's Tier 1 Banks. According to the data, the banks now have a cumulative total customer deposit of N14. 1 trillion.

Which bank is No 1 in Nigeria? ›

Zenith Bank remains firmly at the top of the capitalization ladder, holding a substantial capital base of N1. 92 trillion, solidifying its position as the most capitalised bank in Nigeria.

What is the structure of banks in Nigeria? ›

Structure of banks in Nigeria. The banking system in Nigeria is structured along six layers, namely, central bank, deposit money banks, merchant banks, development finance institutions, microfinance bank, and mortgage banks.

How many banks did we have in Nigeria? ›

List of Commercial Banks in Nigeria There are currently 21 commercial banks in operation in Nigeria.

What are the commercial banks in Nigeria? ›

This is a list of commercial banks with Regional Authorization in Nigeria, arranged alphabetically:
  • Globus Bank Limited.
  • Parallex Bank Limited.
  • PremiumTrust Bank Limited.
  • Providus Bank Limited.
  • SunTrust Bank Nigeria Limited.
  • Signature Bank Limited.

What are the two most popular types of banks? ›

Broadly speaking, banks in the United States fall into two categories: commercial banks and investment banks. Commercial banks offer savings, checking, and lending services, and they are usually regulated by the Office of the Comptroller of the Currency (OCC).

Which bank is Tier 1 in Nigeria? ›

Zenith Bank was voted as Bank of the Year (Nigeria) in The Banker's Bank of the Year Awards 2020, Best Bank in Nigeria in the Global Finance World's Best Banks Awards 2020 and 2021, and Best Corporate Governance 'Financial Services' Africa 2020 and 2021 by the Ethical Boardroom.

Which bank is Tier 1 in Nigeria 2024? ›

Top performers in Q1 2024 included Zenith Bank (N320. 2 billion pre-tax profit), FBN Holdings (N238. 5 billion), Access Holdings (N202. 7 billion), and UBA (N156.

Which banks are 2nd tier in Nigeria? ›

After surveying the listed tier-two banks on NGX, BusinessDay's analysis showed Stanbic IBTC, Ecobank, Union, Fidelity, FCMB, Wema, Sterling, and Unity as the banks with the highest market value from January 7, 2022, to January 12, 2023. The tier two banking sector market capitalisation increased to N1.

Which is the most stable bank in Nigeria? ›

List of Top 9 Banks in Nigeria
  • Zenith Bank.
  • Guaranty Trust Bank (GT Bank)
  • First Bank of Nigeria.
  • Ecobank Nigeria.
  • Access Bank.
  • United Bank of Nigeria.
  • Diamond Bank.
  • Union Bank of Nigeria.

What is the richest bank in Nigeria? ›

Zenith Bank is Nigeria's most capitalized bank, with a capital base of about N1. 92 trillion as of September 2023.

Which bank in Nigeria is best for international transactions? ›

Here are The Top 4 Banks For International Transactions in Nigeria:
  • 1.) First Bank. First bank has a lot of products and features to enable international transactions. ...
  • 2.) GT Bank. Under GT Bank, we have The GT Bank International Money Transfer(GTMT); an exclusive international money transfer service. ...
  • 3.) Access Bank.

What is the best bank in Nigeria? ›

Zenith Bank Plc has emerged as the Best Bank in Nigeria in the Global Finance Best Banks Awards 2024, winning the award for the fourth time since 2019. The Bank was among other banks from 36 countries in Africa recognised as the prestigious Global Finance announced its 31st Annual Best Bank Awards Winners.

What are the 12 banks? ›

The Reserve Banks are decentralized by design and are located in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.

Which Nigerian banks are in the US? ›

UBA America is the only sub-Saharan African bank with an operational banking license in the U.S. We're based in New York City, a global financial center and clearing hub for the U.S. Dollar.


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