The Central Bank of Nigeria has directed all banks currently under regulatory forbearance to suspend dividend distributions, defer executive bonuses, and halt investments in foreign subsidiaries or offshore ventures.
The move is part of broader efforts by the apex bank to reinforce capital buffers, enhance financial system stability, and promote prudent capital retention within the nation’s banking sector.
This directive is specifically aimed at banks benefiting from regulatory forbearance due to infractions such as breaching credit exposure thresholds and exceeding the Single Obligor Limit —both red flags indicating financial stress.
“This temporary suspension is until such a time as the regulatory forbearance is fully exited and the banks’ capital adequacy and provisioning levels are independently verified to be fully compliant with prevailing standards. This supervisory measure is intended to ensure that internal resources are retained to meet existing and future obligations and to support the orderly restoration of sound prudential positions,” the CBN stated.
As outlined in the new directive, affected banks must:
Suspend all dividend payments to shareholders.
Defer bonuses to directors and senior management.
Refrain from making new investments in foreign subsidiaries or offshore ventures.
These restrictions will remain in place until the institutions fully exit the regulatory forbearance regime and their capital adequacy and loan provisioning levels are independently verified as compliant with current standards.
The banking sector in Nigeria is presently undergoing a comprehensive recapitalization process, with revised capital thresholds expected to be gradually implemented through 2026.
The CBN’s latest directive highlights the urgency of capital preservation amid ongoing foreign exchange volatility, rising inflation, and increasing credit exposure to high-risk sectors. It also reflects a continuation of the central bank’s firm stance on limiting excessive risk-taking and ensuring sound financial governance across the industry.
