JP Morgan and Absa Move on Nigerian Banking Licences as FX Reserves Hit $55bn

JP Morgan plans to start merchant banking operations in Nigeria before the end of 2026, subject to regulatory approval, while South Africa's Absa Group is weighing whether to convert its Nigerian representative office into a fully licensed merchant bank.

The two moves were disclosed separately, and both point to renewed interest from global lenders in Nigeria's corporate and investment banking market.

JP Morgan targets merchant banking licence

JP Morgan, the world's largest bank by market capitalisation with over $4.1 trillion in assets, announced its plan through Dapo Olagunji, its managing director for West Africa. Olagunji revealed the plan last week at the Nigeria-Asia Financial Connectivity Dialogue held in Singapore.

The entry is subject to regulatory approval and would build on JP Morgan's existing client relationships in the country.

Absa still undecided on Nigerian licence

Absa chief executive Kenny Fihla confirmed in August that the group was still evaluating its options. "Evaluating whether we should stay with a representative office or whether we should be exploring other alternatives, including a merchant banking licence," he said.

Fihla said a decision would be communicated when the time was right.

South Africa, Kenya and Ghana together accounted for more than 80% of Absa's profit in the first half of 2026, a concentration Fihla acknowledged posed risks. He said diversifying across more markets, business lines and customer segments was a priority, and Nigeria's scale makes it a natural candidate.

The numbers drawing global lenders back

Several data points are reinforcing Nigeria's appeal. The Central Bank of Nigeria reported that foreign exchange reserves reached $55 billion on October 8, 2026, their highest level in 18 years.

The Nigerian stock market posted a 74.7% year-to-date return in US dollar terms as of October 6, according to African Markets data, making it the best-performing bourse on the continent.

Credit rating agencies have also taken note. Moody's revised Nigeria's outlook to positive from stable in August 2026, while affirming its B3 rating. Fitch followed on October 9 with a similar positive revision, maintaining its B rating. S&P Global Ratings had earlier upgraded Nigeria's sovereign credit to B from B- in May, though it kept a stable outlook.

What it means for Nigerian banking

A licensed merchant banking presence from JP Morgan and Absa would put two more deep-pocketed players into the segment that serves large corporates, government entities and institutional investors. That could tighten competition for deal mandates, trade finance and foreign currency liquidity, areas where local lenders have held the upper hand.

For the naira, the arrival of global banks typically signals more cross-border flows and more counterparties willing to hold naira assets, though the immediate effect depends on how quickly the licences are granted and how much capital the two banks deploy.