The Central Bank of Nigeria has mandated banks under regulatory forbearance to halt dividend payouts, postpone executive bonuses, and suspend investments in foreign subsidiaries or offshore ventures.
This measure is part of a broader effort to bolster capital reserves, strengthen financial stability, and encourage prudent capital retention within the banking industry.
The directive specifically targets banks currently benefiting from regulatory forbearance due to breaches in credit exposure limits and Single Obligor Limit requirements—indicators of potential financial stress within those institutions.
The CBN stated that the suspension will remain in effect until it can independently verify the capital adequacy of the affected banks.
“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.
According to the directive, banks under regulatory forbearance are required to:
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 effect until the affected banks fully exit the forbearance regime and their capital adequacy and loan provisioning levels are independently confirmed to meet current regulatory standards.
Nigeria’s banking sector is currently undergoing a significant recapitalization drive, with new capital requirements set to be phased in through 2026.
The CBN’s latest directive underscores the need for capital preservation amid persistent FX volatility, rising inflation, and growing exposure to high-risk sectors.
It marks the latest in a series of tightening measures by the apex bank aimed at curbing excessive risk-taking and promoting sound capital management within the industry.
