The banking sector in Nigeria, similar to most countries is divided into tier 1, tier 2, and tier 3 banks depending on the banks’ capital investments and financial strength. Tier 1 banks tend to spend the most over the cause of a year as compared to other tier’s.

In this post, I will be focusing on tier 1 banks, specifically, tier 1 banks in Nigeria.
Tier 1 has to do with the capital displaying the financial strength of a bank as it shows the bank’s core capital including equity capital and disclosed reserves. Regulators use tier 1 capital for the purpose of ensuring that banks have enough capital in case of unexpected losses.

Tier 1 Banks in Nigeria

Tier 1 capital consists of shareholders’ equity and retained earnings—disclosed on their financial statements—and is a primary indicator to measure a bank’s financial health. These funds come into play when a bank must absorb losses without ceasing business operations. Tier 1 capital is the primary funding source of the bank. 
Typically, it holds nearly all of the bank’s accumulated funds. These funds are generated specifically to support banks when losses are absorbed so that regular business functions do not have to be shut down.

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The capital held helps to ensure there is enough money to fulfill needs. Tier 1 capital includes common stock, retained earnings, and preferred stock. The amount of capital that is held shows the strength of that bank as a measure of financial preparedness in case of emergencies.

The equity component of tier-1 capital has to have at least 4.5% of RWAs. The tier 1 capital ratio has to be at least 6%. Basel III also introduced a minimum leverage ratio with tier 1 capital, it must be at least 3% of the total assets—and more for global systemically important banks that are too big to fail.

There are five tier-1 banks in Nigeria, namely; First Bank of Nigeria, United Bank for Africa Plc (UBA), Zenith Bank Plc, Guaranty Trust Bank Plc, and Access Bank Plc. The remaining eight banks fall into the category of tier-2. A little bit about the tier 1 banks in Nigeria will be discussed below.

1. Access Bank Nigeria PLC

Access bank is another customer-friendly Nigerian bank ranked among the best to bank with. With their recent acquisition of Diamond Bank PLC, they have even gotten stronger and are one of the few banks in Nigeria with the largest customer base. Access bank Nigeria began operations in 1989 with a license to operate as a financial institution from the Central Bank of Nigeria.

2. First Bank of Nigeria

Aside from being the oldest financial institution in the country, First Bank is among the top 10 best banks in Nigeria to open a savings account with. They are a leading company worth $21.3 billion in total assets.
FBN was established in 1894 and is known as the oldest bank in Nigeria.  The Banker magazine of the Financial Times Group awarded First Bank as “The Best Bank Brand in Nigeria” for five years back to back (2011, 2012, 2013, 2014 and 2015).

3. Guarantee Trust Bank

Guaranty Trust Bank is also known as GTBank is considered the best bank in Nigeria today when it comes to banking service and customer relations. They are a customer-centered bank with a trusted reputation, part of the reasons the top my list for the best bank in Nigeria. Polls and popular reviews show that GTBank is the bank almost every Nigerian patronizes.

4. United Bank for Africa (UBA)

UBA is one of the best banks in Nigeria that provides real digital banking services at its peak. They have one of the best customer care services and would respond well to any of your queries until you are satisfied.

5. Zenith Bank Nigeria

Zenith Bank PLC is another top licensed commercial bank providing financial services not only in Nigeria but also in West Africa. Established in 1990, this institution was listed on the Nigerian Stock Exchange (NSE) and is also Nigeria’s biggest bank by tier-1 capital with worth over $850 million in shares.

Differences Between Tier1, Tier 2, and Tier 3 Banks

Tier 1 capital is a bank’s core capital and includes disclosed reserves that appear on the bank’s financial statements and equity capital. This money is the funds a bank uses to function on a regular basis and forms the basis of a financial institution’s strength.

Tier 2 capital is a bank’s supplementary capital. Undisclosed reserves, subordinated term debts, hybrid financial products, and other items make up these funds.
Tier 3 capital is tertiary capital, which many banks hold to support their market risk, commodities risk, and foreign currency risk, derived from trading activities. Tier 3 capital includes a greater variety of debt than tier 1 and tier 2 capital but is of a much lower quality than either of the two.

NOW, LETS CONSIDER NAMES OF BANKS IN NIGERIA

Banking in Nigeria has gone beyond a mere avenue for safeguarding funds and for executing transactional purposes. In reality, it has become a huge industry contributing immensely to the country’s economic footing. While the history of concrete banking in Nigeria dates back to the establishment of Nigeria’s oldest bank, present-day First Bank of Nigeria, it’s fascinating to see how banking has metamorphosed into a giant industry with a host of banks making dramatic waves.

As it stands, there are well over 20 consolidated banks in Nigeria and these banks fall under categories depending on their modes of operation. Above all, the Central Bank of Nigeria (CBN) is regarded as Nigeria’s apex bank for its regulatory authority over the other banks in the country.

Currently, there are 22 “CBN-authorized” commercial banks in Nigeria. While most of these commercial banks hold licenses for operation only within Nigeria, several others are authorized to operate beyond Nigeria and a few of them operate only in certain Nigerian regions.

An analysis of the banking industry shows that Nigeria has 8 internationally authorized commercial banks, 11 nationally authorized commercial banks, 3 regionally authorized commercial banks, 5 merchant banks and 2 non-interest banks.

JAIZ Bank Plc and TAJBank Limited seem to be the only two Nigerian banks operating on a zero-interest basis. However, JAIZ Bank is the only non-interest Nigerian bank with CBN-granted national authorization.

This post contains a complete list of “authorized” Nigerian banks with essential details (in specific cases) including their official website links and telephone contacts.

A Comprehensive List of Banks in Nigeria

WE CAN ALSO LOOK AT SOME OF THE  RICHEST BANKS IN NIGERIA

With over 20 commercial banks, the Nigerian banking industry has maintained its footing as one of the contributive sectors to Nigeria’s economy. Through constant delivery of banking services and the adoption of premium banking facilities, several Nigerian banks have captured the fancies of numerous customers and garnered huge assets.

This post clearly discusses Nigeria’s 5 richest banks with current total assets as the basis for selecting the country’s richest banks.

Access Bank

Established in 1989, Access Bank presently holds massive assets worth #6.4 trillion, giving it a strong footing as Nigeria’s richest bank. Since its establishment and its attainment of operational license from the Central Bank of Nigeria (CBN) in 1998, Access Bank has continually amassed a large amount of customers.

At the moment, the bank operates broadly across Nigeria through its 400+ branches and 2000+ ATM stands. Over its years of operative banking, Access Bank is known to have successfully merged with various other Nigerian commercial banks including Intercontinental Bank, Diamond Bank (which it merged with in 2019), Marina Bank and Capital Bank.

Zenith Bank

Zenith Bank is a remarkable Nigerian bank to reckon with owing to its excellent use of the Internet in the delivery of services to customers. Established in1990, Zenith Bank presently boasts over 500 branches across Nigeria with a considerable number of ATM stands serving its huge customer base.

The bank claims the second spot among Nigeria’s richest banks owing to its total assets worth #5.9 trillion. Interestingly, Zenith Bank has taken its tentacles of operation beyond Nigeria with operative subsidiaries in several countries including UAE, Ghana, South Africa, Sierra Leone, United Kingdom and China.

First Bank of Nigeria

Initiated in 1894 as Nigeria’s first bank under the brand name Bank of British West Africa, First Bank is unarguably Nigeria’s oldest bank. Over years of operative banking, First Bank of Nigeria has remained among Nigeria’s leading banks in terms of customer base, banking services, revenue and staff base.

As it stands, the bank boasts no less than 10 million customers with whopping assets worth #5.5 trillion. Over and above that, it is interesting that the bank has bagged the prestigious award “The Banker magazine’s Best Bank in Nigeria Award” for a record number of 5 times.

UBA (United Bank for Africa)

United Bank for Africa has gained ground as one of the leading banks in Nigeria and largely across the African continent. Established as far back as 1949, UBA is uniquely touted as the first Nigerian bank to start AI-led Virtual Banking Robot and initiate premium banking facilities such as First Visa Dual Currency Debit Card and First Cash Deposit ATMs.

While UBA elegantly boasts over 15 million customers, the bank further maintains offices in America’s New York, Paris (in France) and UK’s popular city of London. At the moment, UBA’s total assets are worth #4.8 trillion.

GTBank (Guaranty Trust Bank)

GTBank is undoubtedly one of Nigeria’s leading financial institutions with millions of customers. Established in 1988 through the coalition of enterprising individuals including Femi Akingbe, Tayo Aderinokun, Gbolade Osibodu, Femi Pedro and Fola Adeola, GTBank has earned remarkable credit as one of Nigeria’s most trusted and innovative financial institutions.

Confirming its innovative strength, GTBank is named among Nigeria’s trailblazers of online banking, SMS banking, mobile banking and naira-denominated Mastercard. Notably, GTBank holds an extensive operational boundary spanning across other countries including Kenya, Liberia, the United Kingdom, Rwanda, Sierra Leone, Gambia, Ghana and Cote d’Ivoire. At the moment, GTBank’s total assets are valued at #3.4 trillion, making the financial institution Nigeria’s 5^th richest bank.

Conclusion

Tier 1 banks in Nigeria are quite small in numbers considering the number of banks in the country. It is no surprise, however, since these banks are amongst the top 10 banks in Nigeria, ranked based on their financial strength and customer relation.

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