The Central Bank of Nigeria has cautioned that stronger capital buffers must not encourage excessive risk-taking, advising bank boards to reassess their risk appetite frameworks and ensure capital is deployed in ways that support long-term value creation.

The apex bank issued the warning after the completion of the banking sector recapitalisation exercise, which significantly improved capital strength across financial institutions.

This position was conveyed by Dr. Blaise Ijebor, Director of the Risk Management Department and Chief Risk Officer at the CBN, during a virtual risk management roundtable organised by the Association of Enterprise Risk Management Professionals on Thursday.

Ijebor stressed that strong capital levels alone are not enough to ensure stability in the banking sector.

“Capital builds strength, but governance sustains it, “he said.

He pointed out that previous banking crises demonstrated how weak governance structures, poor credit risk management, and incentive-driven lending practices can still destabilise even well-capitalised institutions.

Ijebor cautioned that higher capital levels should not translate into excessive risk-taking, urging bank boards to ensure capital deployment is aligned with long-term value creation.

He also noted that risk and compliance professionals are expected to take on more strategic roles in shaping decision-making processes within financial institutions.

According to him, the recapitalisation exercise was a forward-looking reform aligned with global best practices, incorporating stress testing, capital adequacy requirements, and recovery planning frameworks.

The CBN has concluded its recapitalisation programme designed to strengthen the resilience of the country’s banking sector.

Under the exercise, 33 banks successfully met the revised minimum capital requirements by the March 31, 2026 deadline.

The initiative also mobilised about N4.65 trillion over a 24-month period.

Following the recapitalisation, capital adequacy ratios across the industry now exceed Basel benchmarks, indicating improved buffers against potential financial shocks. Domestic investors contributed 72.55 per cent of the total capital raised.

The programme is regarded as a major milestone in ongoing efforts to position the banking sector for stronger growth, stability, and enhanced shock absorption capacity.

Ijebor outlined key risk areas banks must prioritise in the post-recapitalisation phase.

He pointed to balance sheet vulnerabilities, operational and integration risks, systemic risks, and governance challenges as critical concerns requiring close attention.

He stressed the need for rigorous stress testing, accurate asset valuation, and strong board-level oversight to safeguard financial stability.

Ijebor also underscored the importance of robust anti-money laundering and counter-terrorism financing frameworks to strengthen compliance and protect the integrity of the banking system.

The recapitalisation exercise has significantly reshaped Nigeria’s banking sector, with most financial institutions now meeting the newly introduced capital thresholds.