A Brief History of Banking in Nigeria: From 1892 to Today

The history of formal banking in Nigeria begins in 1892 with the establishment of the African Banking Corporation (ABC) in Lagos, a British colonial enterprise primarily tasked with facilitating trade finance for the Royal Niger Company. Three years later, the Bank of British West Africa — precursor to today's First Bank — absorbed ABC and began expanding across the colony, opening branches in Calabar, Kano and Port Harcourt as the colonial economy deepened.

For the first half of the twentieth century, banking in Nigeria was almost entirely a colonial enterprise. Indigenous Nigerians were systematically excluded from credit and frequently denied accounts. It was not until 1933 that the first Nigerian-owned bank, the National Bank of Nigeria, was established by Obafemi Awolowo and a group of Yoruba businessmen in Ibadan. The Industrial and Commercial Bank followed in 1929 and the African Continental Bank — backed by Nnamdi Azikiwe — in 1947. These pioneer banks operated with thin capital and faced fierce competition from expatriate-owned institutions.

Independence in 1960 brought the Central Bank of Nigeria into existence, established by the CBN Act of 1958 and formally operational from July 1959. The CBN's early mandate was both monetary and developmental: issuing the Nigerian pound (later the naira after the 1973 currency reform), managing external reserves and directing credit to priority sectors. Through the 1960s and 1970s the government indigenised major banks, taking equity stakes in Barclays (now Union Bank), Standard Chartered's predecessor and BCCI's Nigerian operations.

The structural adjustment era of the 1980s unleashed a wave of new bank licensing. Between 1985 and 1993, over 100 new banks were licensed under deregulation, creating what the CBN later described as a 'distress syndrome': undercapitalised, politically connected banks that competed recklessly for deposits and collapsed in droves. By the late 1990s, the sector was in deep crisis. The Nigeria Deposit Insurance Corporation (NDIC) spent billions resolving failed institutions, and public trust in banks reached an historic low.

The turning point came in 2004 when Governor Soludo announced a 13-bank consolidation, raising minimum capital from ₦2 billion to ₦25 billion and imposing a December 2005 deadline. The exercise reduced the number of banks from 89 to 25 through mergers, acquisitions and outright closures. The surviving banks emerged with stronger balance sheets and greater capacity to fund Nigeria's oil boom. The 2008–2009 global financial crisis and a domestic banking crisis caused by margin lending prompted the CBN under Sanusi Lamido Sanusi to inject ₦620 billion into nine distressed banks and establish the Asset Management Corporation of Nigeria (AMCON) to absorb toxic assets. From that crucible, today's banking sector — leaner, better regulated and increasingly digital — has emerged.