JPMorgan Chase has deposited 50 billion naira ($38 million) with the Central Bank of Nigeria as it moves closer to securing a licence to operate a merchant bank in Africa’s most populous country, Bloomberg reported, citing people familiar with the matter.

The deposit is among the final regulatory requirements for approval, the people said. The bank expects to receive its licence by the end of 2026 or early 2027, provided it secures the necessary regulatory clearances.

The proposed operation would expand JPMorgan’s presence beyond its existing representative office in Lagos, giving the US lender a broader platform to serve Nigerian companies and institutional clients.

JPMorgan seeks wider presence in Nigeria

JPMorgan, the largest US bank by assets, has maintained a presence in Nigeria through a representative office in Lagos, where it serves clients and supports financial transactions.

A merchant banking licence would allow the lender to expand its activities in the country, potentially increasing its involvement in corporate finance, lending, trade finance and other services for businesses and institutional investors.

The bank has long worked with Nigerian companies and government institutions on international financial transactions, including debt issuance and capital markets activities.

According to reports, the 50 billion naira deposit represents a key step towards meeting the capital requirements for the proposed operation. Bloomberg cited people familiar with the application who requested anonymity because the process is private.

Capital requirement forms part of licensing process

Nigeria has tightened capital requirements for banks as part of efforts to strengthen the financial system and improve lenders’ capacity to withstand economic shocks.

In March 2024, the CBN announced a banking-sector recapitalisation exercise that raised minimum capital thresholds across several categories of financial institutions.

Under the framework, merchant banks with national authorisation are required to maintain minimum paid-up capital of 50 billion naira. The reported deposit matches that threshold.

Capital requirements are intended to ensure that financial institutions have sufficient financial resources to support their operations and manage risks. Meeting a capital threshold, however, is only one part of the regulatory process and does not replace the central bank’s assessment of an applicant.

The CBN will need to complete its review before JPMorgan can begin operating under the proposed licence.

The distinction is important because the bank’s reported progress reflects preparation for a possible launch, rather than confirmation that it has been authorised to conduct merchant banking business in Nigeria.

Expansion could broaden corporate banking services

A Nigerian merchant banking operation could enable JPMorgan to deepen its relationships with large businesses that need financing, international payment services and access to global capital markets.

Trade finance, for example, helps companies fund imports and exports, manage payment risks and meet obligations across borders. A stronger local presence could allow JPMorgan to serve corporate clients more directly while connecting Nigerian businesses with its international network.

Corporate lending could also become an important part of the proposed operation, depending on the activities permitted under the final licence. Companies seeking foreign-currency financing may benefit from additional access to international lenders, although the actual terms and availability of credit would depend on the bank’s lending decisions and market conditions.

JPMorgan’s existing experience in debt markets and cross-border transactions provides a foundation for serving institutional clients in Nigeria. However, the precise scope of its proposed Nigerian operations has not been fully disclosed in the reports.

The licence would not automatically mean JPMorgan would establish a nationwide network of branches serving retail customers. The reported application concerns a merchant banking operation, which typically focuses on corporate and institutional clients rather than conventional consumer banking.

Nigeria remains important to international banks

Nigeria is a major African market for international financial institutions because of its large population, substantial corporate sector and role in regional trade.

International banks support businesses and governments through services including bond issuance, foreign-exchange transactions, financing and investment banking. Their participation can help connect domestic borrowers with overseas investors and funding sources.

However, foreign lenders must also assess currency movements, regulatory requirements, credit risks and wider economic conditions when deciding how to allocate capital.