Business & Tech


Banking in Nigeria has deep roots.  As far back as the early 20th century, native Nigerians had accepted several items as having equivalent exchange value, such as gun powder, gold dust etc. in addition to widely accepted legal tenders e.g. cowries and manilas (a curved rod of copper or brass).

Nigerian Banking

Foreigners in the country at the time attempted to influence these accepted means of exchange towards streamlining and standardizing the prices of goods and services. These colonial masters outlawed the local method of trading in 1902 by fully introducing the Sterling as the legal tender which many perceived as insidious.

Furthermore, the Nigerian currency was changed from ‘Pounds’ to ‘Naira’ which led to the introduction of the Twenty Naira note serving as the highest denomination at the time of introduction; and bearing the portrait of the 1975 revolutionary torch bearer, General Murtala Muhammed.

In close successions, One, Five, and Ten Naira notes were introduced in 1979. More recently, on February 28th 2007, Five and Ten Naira note denominations were reformed while Twenty and Fifty Naira note denominations were introduced. In addition, Fifty Kobo, One Naira and Two Naira coins were introduced and remain in use till date.


African Banking Corporation bank note issued between 1900 and 1920 in South Africa

The birth of a structured Nigerian Banking System is strongly linked to the colonial era, having commenced in 1892 and was primarily orchestrated by foreigners. The banking sector’s development was largely fueled by the colonial governments’ financial needs, as indigenes had limited access to banking and credit facilities due to foreign saturation. At the time, the system was rather rigid and restricted and made essential financial transactions quite difficult to execute compared to the present-day system. This strict system stirred Nigerian capitalists into molding financial institutions such as the African Banking Corporation (ABC), Bank of British West Africa, Anglo-African Bank and Colonial Bank between the 1920s and 1950s. Although most of the banks established during late 19th century through the early 20th century didn’t survive, these 3 banks (as examples) suited the funding needs of Nigerians during the colonial period.

ABC dates back to 1892, and was previously based in South Africa as Elder Dempster Merchants, prior to its takeover by a trust fund called the British Bank of West Africa (BBWA) in 1893. The BBWA having fully acquired ABC was renamed Bank of West Africa in 1957 to truly reflect the regional identity of the bank. A few years later in 1966, the Bank of West Africa adopted the name Standard Bank of West Africa Limited following its merger with Standard Bank, UK. By 1969, the bank incorporated locally as Standard Bank of Nigeria Limited and finally the name is changed to First Bank of Nigeria in 1979. The Bank of British West Africa also acquired the Bank of Nigeria in 1912 formally known as the Anglo-African Bank.


The Nigerian Banking sector experienced consolidated growth in the mid-1990s and this development could be attributed to intervention plans that were introduced to slow down the rapid collapse of pilot banks in the 1930s and 1940s. The fold-up of banks such as The Industrial and Commercial Bank (the first domestic bank in Nigeria that was established in 1929), and The Nigerian Penny Bank (established in 1940) drove the creation of financial intervention bodies. Following the failures of several banks in the 1930s and 1940s, the Patron’s Commission of 1948 was inaugurated to identify the root cause of bank failures and investigate and proffer solutions to banking operations and processes in the country.

As at the early 1970s, there were 14 commercial banks in Nigeria which rose to 21 in 1980. The banking industry remained increasingly attractive and sky rocketed to 121 banks in 1991 which comprised of 66 Commercial banks and 55 Merchant Banks.
The Commission will later on serve as the bedrock of the Banking Ordinance of 1952.

The Patron Commission’s research noted that bank closures were due to inadequate banking resources, foreign competition, minimal regulation and general “teething problems” of the new sector. Following subsequent steps to address the issues uncovered by the commission, there was an uptick in the creation of commercial banks and these banks will go on to constitute the most prominent group of banks within the financial sector. A few years later, the Central Bank of Nigeria (CBN) was established on July 1st, 1959 and continues to serve as the financial process regulator and chief financier to financial institutions. The Banking Ordinance of 1952 and The Banking Decree of 1969 were also introduced to build greater momentum towards a well stabilized and structured indigenous banking system. The Nigerian Banking sector further prospered with the increase in oil prices in the 1970s and the widespread economic boom. Similarly, the International Monetary Fund’s (IMF) structural adjustment program was introduced which further fueled government and private sector bank ownership.

Nigerian Banking
Central Bank of Nigeria Headquarters in Abuja

Following Nigeria’s independence and up till the early 1980’s, regulatory banking organizations sprang up. Such organizations such as the Nigerian Deposits Insurance Commission (NDIC), which was set up in 1988, played its part in standardizing the liability base of banks and creating a growth enabling environment. This period of confidence building further enabled strategic sector focused specialization in the merchant, commercial and regional banking spaces, evidenced in the establishment of the likes of Philips Hill Nigeria Limited (1961), which later merged into Nigeria Acceptances Limited (1969) and eventually became Merchant Bank Limited. International interest in the Nigerian Banking space also flourished, with the likes of the International Merchant Bank Limited parented by First National Bank of Chicago, and in addition First National Bank of New York which birthed Continental Merchant Bank Limited.

Top 5 Five Banks

  1. Zenith
  2. First Bank
  3. Guaranty Trust Bank (GTB)
  4. Access Bank
  5. United Bank for Africa (UBA)

As at the early 1970s, there were 14 commercial banks in Nigeria which rose to 21 in 1980. The banking industry remained increasingly attractive and sky rocketed to 121 banks in 1991 which comprised of 66 Commercial banks and 55 Merchant Banks. At this point, the banking sector owing to issues such as weak ownership structures, technical dysfunctions, as well as industry saturation, plummeted into distress. This structural breakdown eventually led to the failure of 27 banks in 2003. Over time, the Nigerian Banking industry continuously shed its baby weight, attaining full maturity through a CBN directive in the year 2004. The CBN mandate stipulated a minimum capital base for local and foreign banking institutions which threw the industry players into a frenzy and resulted in mergers, acquisitions and in more extreme cases, liquidation. As a result of this new directive, only 25 banks were left standing by 2006.

It should also be noted that Automated Teller Machines (ATM) was introduced in Nigeria in 1989. The first bank to have an ATM installed is the now defunct Society General Bank in 1987 while the Moribund Societe Generale (SGBN; now Heritage Banking Company) was the first bank to introduce the ATM in 1990. A year later, First Bank will join the fray and also introduce its own ATM. The First Bank ATM was built for a through-the-wall access unlike the SGBN ATM that was a drive-in-system.


Today, the Nigerian Banking scene has significantly matured, with 22 operating commercial banks, 7 of them ranked amongst the World’s Top Banks by the Financial Times. The banks are ranked based on key indicators such as Financial Performance, Asset Base and Size just to mention a few. The most stellar Nigerian Bank in the ranking is Zenith Bank. The bank began operations in 1990 and currently holds over $2.8 Billion in shareholders’ funds.  Zenith also ranked 7th in Africa and 325th globally. The bank is famous for its stability, and eye-catching Christmas decorations on Ajose Adeogun Street (popularly called Zenith Road), Victoria Island, Lagos. Zenith Bank was once perceived as elitist but has gradually rebranded and is now considered a “bank for everyone”.

Nigerian Banking
Zenith Bank Plc Head Quarters, Victoria Island, Lagos

First Bank of Nigeria, referred to as the oldest lasting bank in Nigeria, and which began operations in 1894, was ranked 2nd with shareholders’ funds of over $2 Billion, 11th in Africa and 417th globally. First Bank is perceived as the sturdy and reliable “mother of all banks” having survived all these years and still standing strong and performing quite well.

Coming in 3rd is Guaranty Trust Bank (GTB) with over $1.6 Billion in shareholder capital, ranking 13th in Africa and 490th in the world. GTB is renowned for its vibrant orange color and has strong alignment with the fashion, art and entertainment industry.

Nigerian Banking
Zenith Bank Plc Head Quarters, Victoria Island, Lagos

Access Bank ranked 4th with shareholders’ funds at over $1.5Billion, 14th place in Africa and 522nd in the world. Access Bank is known for its rapid growth and development in addition to the bank’s highly confident and professionally driven employees.

The United Bank for Africa (UBA) was ranked 5th with over $1 Billion in shareholders’ funds, 18th place in Africa and 670th globally. UBA is known for its bright red logo, financial sturdiness and is often perceived as the “ever reliable friend” to all classes of the society.


The Nigerian Banking space, arguably one of the most promising industries with products and services designed to suit the needs of clients cutting across fragmented social, financial, political and economic boundaries, is undisputedly dynamic and has come to stay for good. In the new era, Nigerian Banks provide banking packages that equally suit the lower class; a provision that was profoundly lacking in the early years. This opportunity has been achieved by reducing barriers to service access and creating suitable alternatives for low-end banking.

Today, the average Nigerian Bank provides topmost e-banking, mortgage, social banking, credit and automated banking services. A solid number of Nigerian banks are heavily involved in corporate social responsibility, provide well-paying employment to a large chunk of the labor market and have well transitioned from long sweaty queues to first-rate banking lounges. However, the notion of delivering top notch customer service is still lacking. As Nigerian Banks look forward to the future, the concept of customer service must be given high priority as this integral attribute will be crucial in retaining current customers and acquiring new ones.



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  2. Bizer, David S., and Peter M. DeMarzo. “Sequential banking.” Journal of Political Economy (1992): 41-61.
  3. Sanusi, L. Sanusi. “Banking reform and its impact on the Nigerian economy.” CBN Journal of Applied Statistics 2.2 (2012): 115-122.
  4. Uche, Chibuike. “Indigenous banks in colonial Nigeria.” The International Journal of African Historical Studies 43.3 (2010): 467-487.
  5. Familoni J. A., Management of Banks and Financial Institutions in Perspectives, 2000.
  6. Falola, Toyin, and Matthew M. Heaton. A history of Nigeria. Cambridge University Press, 2008.