International and African banking groups are increasing their interest in Nigeria’s corporate and investment banking market, even as some European lenders scale back operations across the continent.
J.P. Morgan plans to establish a merchant bank in Nigeria before the end of 2026, subject to regulatory approval, while South Africa’s Absa Group is considering obtaining a similar licence.
The developments reflect growing interest in Nigeria’s corporate lending, trade finance and capital markets, supported by improving foreign exchange reserves, stronger equity market performance and more favourable sovereign credit outlooks.
However, inflation, currency volatility, regulatory requirements and high operating costs remain significant risks for foreign lenders considering expansion.
J.P. Morgan Plans Merchant Banking Operations
J.P. Morgan’s proposed merchant bank would expand its existing presence in Nigeria and strengthen its ability to serve local businesses and investors.
Dapo Olagunji, the bank’s managing director for West Africa, announced the plan at the Nigeria–Asia Financial Connectivity Dialogue in Singapore.
The bank, which has more than $4.1 trillion in assets, already has established international corporate and investment banking operations and relationships connected to Nigeria.
Its planned expansion comes as international lenders seek greater access to African businesses, financing opportunities and capital markets.
Absa Considers Nigerian Banking Licence
Absa Group is also evaluating whether to convert its Nigerian representative office into a licensed merchant bank.
The South African lender is seeking to diversify its revenue across geographical markets, business lines and customer segments. Its earnings have remained concentrated in a few markets, particularly South Africa, Kenya and Ghana.
A merchant banking licence could provide Absa with a broader platform to serve Nigerian corporate clients and participate in financing and capital-market transactions.
Nigeria could also strengthen the bank’s West African operations, complementing its existing presence in Ghana.
However, any expansion would put Absa in competition with established Nigerian lenders, as well as South African banking groups already operating in the country.
Improving Economic Indicators Attract Investors
Nigeria’s improving external position has helped strengthen investor interest.
Foreign exchange reserves reached approximately $55 billion in October 2026, providing a larger buffer against external shocks. The stock market has also delivered strong returns, while international rating agencies have issued more favourable assessments of the country’s credit outlook.
The improvements follow major economic changes, including the removal of petrol subsidies and reforms to the foreign exchange market.
These measures have contributed to a changing investment environment, although the benefits remain uneven and economic pressures persist for households and businesses.
For international banks, the opportunity lies in financing large companies, supporting cross-border transactions and connecting Nigerian businesses to global capital.
Nevertheless, lenders must assess currency risks, operating costs and the regulatory environment before committing to a larger local presence.
Foreign Banks Reassess Their African Operations
Some European banking groups have reduced their exposure to African markets in recent years as they reconsider profitability, capital allocation and operating risks.
Banks including BNP Paribas, Société Générale, Barclays and Standard Chartered have withdrawn from or scaled back selected operations across the continent.
Their retreat has created opportunities for African banking groups to expand and acquire businesses previously owned by international lenders. However, the trend is not uniform, as some global banks continue to pursue opportunities in markets they consider strategically important.
Standard Bank, Africa’s largest lender by assets, is seeking to double its West African business over the next four years. Its strategy includes growing its existing operations in Nigeria, Ghana and Côte d’Ivoire.
First Abu Dhabi Bank has also announced plans to establish a representative office in Lagos, signalling further interest from Middle Eastern financial institutions.
Competition Could Benefit Nigerian Businesses
The arrival of additional international lenders could intensify competition for large corporate customers, cross-border transactions and investment flows.
Nigerian companies could benefit from access to more financing options, international banking networks and specialised financial products. Increased competition could also encourage domestic banks to improve their services and strengthen their capabilities.
However, the impact will depend on how deeply these institutions establish themselves in the country and which services they ultimately provide.
For J.P. Morgan and Absa, Nigeria offers access to one of Africa’s largest economies and a potentially expanding corporate banking market. For domestic lenders, their planned expansion presents both a competitive challenge and an opportunity to build stronger partnerships with international financial institutions.
The key question is whether Nigeria’s improving economic indicators can translate into a stable and profitable environment that encourages foreign banks to commit capital for the long term.
