US banking giant JP Morgan has announced plans to launch merchant banking operations in Nigeria before the end of 2026, subject to regulatory approval, while South Africa's Absa Group is evaluating whether to upgrade its Nigerian representative office to a fully licensed merchant bank.
The moves come as Nigeria's foreign exchange reserves reached an 18-year high of $55 billion in October 2026, drawing renewed attention from global lenders attracted by improving economic indicators and fresh opportunities in the country's corporate and investment banking sector.
JP Morgan's Nigerian Expansion Plan
Dapo Olagunji, JP Morgan's managing director for West Africa, revealed the plan last week at the Nigeria-Asia Financial Connectivity Dialogue held in Singapore. The expansion would build on the bank's existing client relationships in the country.
JP Morgan is the world's largest bank by market capitalisation, with over $4.1 trillion in assets. The proposed merchant banking operations would mark a significant deepening of its footprint in Nigeria, a market it has served through cross-border relationships rather than a local presence.
The announcement follows a period of heightened interest in Nigeria's financial sector, as reforms implemented by the Central Bank of Nigeria and other regulators have made the operating environment more attractive to international institutions.
Absa Weighs Licence Upgrade
South Africa's Absa Group is separately considering whether to convert its Nigerian representative office into a fully licensed merchant bank. Chief executive Kenny Fihla confirmed the deliberations in August, saying the group was evaluating whether to stay with a representative office or explore other alternatives, including a merchant banking licence.
Fihla said a decision would be communicated when the time was right. The evaluation comes as Absa seeks to reduce its concentration risk, with South Africa, Kenya and Ghana together accounting for more than 80% of the group's profit in the first half of 2026.
Fihla acknowledged that this concentration posed risks, and said diversifying across more markets, business lines and customer segments was a priority. Nigeria's scale makes it a natural candidate for expansion, he indicated.
Why Foreign Banks Are Looking at Nigeria
Several data points are reinforcing Nigeria's appeal to international lenders. The Central Bank of Nigeria reported that foreign exchange reserves reached $55 billion on October 8, 2026, their highest level in 18 years. This represents a significant buffer against external shocks and a sign of improved economic stability.
The Nigerian stock market has also performed strongly, posting a 74.7% year-to-date return in US dollar terms as of October 6, according to African Markets data. This makes the Nigerian bourse the best-performing on the continent, a factor that is likely to attract portfolio investors and, in turn, support demand for banking services.
Credit rating agencies have taken note of the improvements. 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.
Another Bank Begins Operation in Nigeria
Earlier, Legit.ng reported that Bank78 MFB has officially commenced operations as a private digital lender in Nigeria. The bank stated that although it is inspired by private-banking culture and mindset, it is deliberately designed for the mass-affluent everyday Nigerian, offering a secure and premium digital banking experience.
The bank said it aims to bridge the gap between fast-growing fintech firms and traditional legacy banks. Its entry adds to the competitive landscape of Nigeria's banking sector, which is seeing increased activity from both international players and local digital lenders.
