The Nigerian Enterprises Promotion Decree of 1972 (Gowon, 23 February 1972) and its 1977 successor (Obasanjo, 12 January 1977) reshaped bank ownership without changing a single bank name. Schedule II of the 1972 NEPD required foreign-owned banks to sell 40% of their equity to Nigerians; the 1977 amendment raised the threshold to 60% and put the Federal Government at the front of the queue. By the close of 1977 the Federal Government held 60% of Bank of British West Africa (renamed First Bank of Nigeria, 1979), 60% of Barclays DCO (renamed Union Bank of Nigeria, 1979), 60% of British and French Bank (renamed United Bank for Africa, 1961, with FG taking the controlling block in 1972), and majority interests in Standard Bank (Nigeria), International Bank for West Africa and Arab Bank. Foreign banking in Nigeria was, on paper, over.
What followed was the state-bank era. Every region — and after 1976 every State — wanted its own bank, partly for prestige, partly because a state-owned bank was a convenient pipeline for project finance, party patronage and election-year salary advances. The Co-operative Bank (Western Region, 1953, recapitalised by Western State 1968); Savannah Bank of Nigeria (1976, originally a North Central State / Bank of America joint venture); New Nigeria Bank (Mid-Western State, 1972); Pan-African Bank (Cross River State, 1971); Mercantile Bank of Nigeria (Cross River, 1972); ACB International (Eastern States Interim Assets and Liabilities Agency, post-war). At its peak (1985) the State-government banks numbered nineteen, with combined deposits of ₦8.4 billion — about one-third of the system.
The model carried a hidden cost. State-owned banks lent on instruction, not on credit analysis; their non-performing-loan books were carried by FG bailouts; and their branch networks were used as political-recruitment offices. By the mid-1980s seven of the nineteen State banks were technically insolvent, kept open only because closure would have meant tens of thousands of redundancies in the originating States. When SAP arrived in 1986 and the central bank stopped writing rescue cheques, the State-bank model collapsed inside five years — Pan-African, Mercantile, Co-operative & Commerce Bank, and (most spectacularly) Savannah were all wound up between 1989 and 2002.
Indigenisation, in retrospect. It nationalised the names but did not transfer the skills: until the late 1980s the senior management of First, Union and UBA was still drawn from the old expatriate-trained Nigerian middle ranks, and credit policy ran on London-era manuals. What indigenisation did do — durably — was create a Federal Government balance-sheet stake in the three biggest banks that survives in residual form to this day, and put Nigerian banking under domestic political pressure for the first time. Both consequences would matter, for better and worse, in the SAP-era liberalisation that came next.
Figure 1
Licensed Nigerian banks, 1894–2024
Every regulatory cycle since 1952 has compressed the field. The 2005 Soludo consolidation cut ninety banks to twenty-five in eighteen months.
Figure 2
Minimum paid-up capital required to operate a bank, 1952–2024 (₦ million, log scale)
The regulatory bar has risen by seven orders of magnitude. Each step up has reset who is allowed to call themselves a Nigerian bank.