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The banking sector in Nigeria, similar to most countries is divided into tier 1, tier 2, and tier 3 banks depending on the banks’ capital investments and financial strength. Tier 1 banks tend to spend the most over the cause of a year as compared to other tier’s. In this post, I will be focusing on tier 1 banks, specifically, tier 1 banks in Nigeria.

Tier 1 has to do with the capital displaying the financial strength of a bank as it shows the bank’s core capital including equity capital and disclosed reserves. Regulators use tier 1 capital for the purpose of ensuring that banks have enough capital in case of unexpected losses.

Tier 1 Banks in Nigeria

Tier 1 capital consists of shareholders’ equity and retained earnings—disclosed on their financial statements—and is a primary indicator to measure a bank’s financial health. These funds come into play when a bank must absorb losses without ceasing business operations. Tier 1 capital is the primary funding source of the bank. 

Typically, it holds nearly all of the bank’s accumulated funds. These funds are generated specifically to support banks when losses are absorbed so that regular business functions do not have to be shut down.


The capital held helps to ensure there is enough money to fulfill needs. Tier 1 capital includes common stock, retained earnings, and preferred stock. The amount of capital that is held shows the strength of that bank as a measure of financial preparedness in case of emergencies.tier 1 banks in nigeria

The equity component of tier-1 capital has to have at least 4.5% of RWAs. The tier 1 capital ratio has to be at least 6%. Basel III also introduced a minimum leverage ratio with tier 1 capital, it must be at least 3% of the total assets—and more for global systemically important banks that are too big to fail.

There are five tier-1 banks in Nigeria, namely; First Bank of Nigeria, United Bank for Africa Plc (UBA), Zenith Bank Plc, Guaranty Trust Bank Plc, and Access Bank Plc. The remaining eight banks fall into the category of tier-2. A little bit about the tier 1 banks in Nigeria will be discussed below.

1. Access Bank Nigeria PLC

Access bank is another customer-friendly Nigerian bank ranked among the best to bank with. With their recent acquisition of Diamond Bank PLC, they have even gotten stronger and are one of the few banks in Nigeria with the largest customer base. Access bank Nigeria began operations in 1989 with a license to operate as a financial institution from the Central Bank of Nigeria.

2. First Bank of Nigeria

Aside from being the oldest financial institution in the country, First Bank is among the top 10 best banks in Nigeria to open a savings account with. They are a leading company worth $21.3 billion in total assets.

FBN was established in 1894 and is known as the oldest bank in Nigeria.  The Banker magazine of the Financial Times Group awarded First Bank as “The Best Bank Brand in Nigeria” for five years back to back (2011, 2012, 2013, 2014 and 2015).

3. Guarantee Trust Bank

Guaranty Trust Bank is also known as GTBank is considered the best bank in Nigeria today when it comes to banking service and customer relations. They are a customer-centered bank with a trusted reputation, part of the reasons the top my list for the best bank in Nigeria. Polls and popular reviews show that GTBank is the bank almost every Nigerian patronizes.

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4. United Bank for Africa (UBA)

UBA is one of the best banks in Nigeria that provides real digital banking services at its peak. They have one of the best customer care services and would respond well to any of your queries until you are satisfied.

5. Zenith Bank Nigeria

Zenith Bank PLC is another top licensed commercial bank providing financial services not only in Nigeria but also in West Africa. Established in 1990, this institution was listed on the Nigerian Stock Exchange (NSE) and is also Nigeria’s biggest bank by tier-1 capital with worth over $850 million in shares.

list of tier 1 banks in nigeria

Differences Between Tier1, Tier 2, and Tier 3 Banks

Tier 1 capital is a bank’s core capital and includes disclosed reserves that appear on the bank’s financial statements and equity capital. This money is the funds a bank uses to function on a regular basis and forms the basis of a financial institution’s strength.

Tier 2 capital is a bank’s supplementary capital. Undisclosed reserves, subordinated term debts, hybrid financial products, and other items make up these funds.

Tier 3 capital is tertiary capital, which many banks hold to support their market risk, commodities risk, and foreign currency risk, derived from trading activities. Tier 3 capital includes a greater variety of debt than tier 1 and tier 2 capital but is of a much lower quality than either of the two.


Tier 1 banks in Nigeria are quite small in numbers considering the number of banks in the country. It is no surprise, however, since these banks are amongst the top 10 banks in Nigeria, ranked based on their financial strength and customer relation.

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