CBN Takes Another Major Action to Boost Banking Industry Resilience

• The CBN has temporarily restricted dividend payments and capital distributions for a few banks still receiving post-pandemic support, as part of an ongoing recapitalisation effort
• The CBN emphasised that these measures are standard and part of a deliberate reform process, with most banks meeting revised capital requirements ahead of the 2026 deadline
• Additionally, the CBN has taken steps to improve financial stability by advising banks to hold foreign exchange revaluation gains in reserve, rather than using them for operational costs or dividends

Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.

Even though it temporarily restricted dividend payments and other capital distributions for a few banks still receiving post-pandemic regulatory support, the Central Bank of Nigeria has underlined the resilience of the nation's banking industry.

Hakama Ali, the CBN's acting director of corporate communications, made the announcement on Tuesday, June 17th.

The bank's ongoing recapitalisation initiative, first announced in 2023, stated that the steps are part of a phased plan aimed at aligning Nigeria's financial sector with long-term economic growth ambitions.

The CBN stated that the majority of banks have either fulfilled or are on course to fulfill the revised capital requirements well in advance of the deadline of March 31, 2026.

“These measures are neither unusual nor cause for concern; they are a continuation of the orderly and deliberate implementation of reforms already underway,” the statement said.

In addition to deferring bonuses for directors and senior executives, the impacted banks have been urged to stop paying dividends to shareholders and cease making new investments in offshore businesses reported that the decision was first communicated in a circular dated June 13, signed by Olubukola Akinwunmi, the Director of Banking Supervision.

According to the CBN, the action is intended to improve capital buffers and promote internal capital retention. The banks in question are still closely monitored by supervisors, even though the restrictions are only temporary.

In accordance with global best practices, the regulator stated that it would permit limited, time-bound flexibility within its capital structure to facilitate a seamless transition. The bank pointed out that Nigeria's capital requirements remain higher than the Basel III minimums worldwide.

“These adjustments reflect a well-established supervisory process consistent with global norms,” the CBN said, adding that regulators in the U.S., Europe, and other markets have adopted similar approaches in the aftermath of financial crises.

In order to guarantee openness and predictability in regulatory activities, the central bank announced that it would continue interacting with stakeholders through the Bankers' Committee, the Body of Bank CEOs, and other industry forums.

Since the start of the COVID-19 pandemic, the CBN has implemented a number of policy interventions to protect the banking industry, which are now being built upon by its most recent transitional measures.

All deposit money banks were instructed by the central bank in 2020 to adjust loan terms and tenors for firms and households impacted by the economic upheaval. To provide borrowers more time to recuperate, interest rate forbearance was extended in March 2021 and again in April 2022.

Customers were less stressed as a result of the respite, but banks were still exposed to increased credit risks because potential loan losses were not immediately recognised.

The CBN took additional action to improve financial stability in 2023 when it issued an order prohibiting banks from utilising the naira's revaluation gains to finance operations or pay dividends. Instead, they requested that lenders hold these gains in a "Special Regulatory Reserve" until further notice.

In March 2024, the regulator reaffirmed similar advice, cautioning banks against considering gains from foreign exchange revaluations as stable profits. It emphasised that these windfalls should be retained to strengthen capital buffers and cushion against future shocks because they are only transitory, particularly in light of currency rate unification.

Two Nigerian banks meet CBN’s recapitalisation target

Legit.ng reported that two commercial banks have already met and beaten the Central Bank of Nigeria (CBN) March 31, 2026, deadline for the new N500 billion minimum capital base requirement for commercial banks.

The two tier-1 lenders are Zenith Bank and Access Holdings, which exceeded the N500 billion threshold and share premium ceiling set by the apex bank.

This is according to a report by Proshare, which said that Zenith Bank leads with a share capital and share premium of N614.65 billion, followed by Access Bank at N594.90 billion.

Source: Legit.ng