The Central Bank of Nigeria (CBN) has confirmed that banks currently affected by forbearance measures are under close supervision.
This comes as part of the regulator’s continued efforts to stabilize and strengthen Nigeria’s banking sector.
According to a press statement by the CBN’s Acting Director of Corporate Communications, Mrs. Hakama Sidi Ali, on Tuesday, these banks still under temporary regulatory support due to the economic aftermath of the COVID-19 pandemic are subject to time-bound measures as part of a broader strategy to implement the bank recapitalisation program announced in 2023.
It added that the recapitalisation programme is designed to align with Nigeria’s long-term growth ambitions, and it has already resulted in substantial capital inflows and balance sheet improvements across the sector.
A limited number of banks are affected
The apex bank noted that the current measures, which specifically affect a limited number of banks, include temporary restrictions on capital distributions, such as dividends and bonuses.
These actions are intended to support the retention of internally generated funds and improve the overall capital adequacy of these institutions. It noted that this move is in line with global regulatory standards.
The statement reads, “The measures announced apply only to a limited number of banks. These include temporary restrictions on capital distributions, such as dividends and bonuses, to support retention of internally generated funds and bolster capital adequacy. All affected banks have been formally notified and remain under close supervisory engagement.”
The central bank’s approach also includes providing time-bound flexibility within the capital framework to allow for a smoother transition. Notably, Nigeria’s capital requirements are more stringent than the global Basel III minimums, which further affirms the CBN’s commitment to maintaining a robust financial system.
The CBN’s actions are consistent with similar transitional measures adopted by regulators in other major global markets following post-crisis reforms.
“These adjustments reflect a well-established supervisory process consistent with global norms. Regulators in the U.S., Europe, and other major markets have implemented similar transitional measures as part of post-crisis reform efforts,” the CBN noted.
According to the statement, the apex bank remains committed to engaging with industry stakeholders, including the Bankers’ Committee and the Body of Bank CEOs, to ensure a transparent and collaborative regulatory environment.
The CBN added, “Nigeria’s banking sector remains fundamentally strong. These measures are neither unusual nor cause for concern; they are a continuation of the orderly and deliberate implementation of reforms already underway.”
The regulator has reiterated its commitment to safeguarding the sector’s stability and supporting the country’s economic growth.
The CBN had recently issued a fresh directive instructing banks operating under regulatory forbearance to suspend dividend payments, defer bonuses for executives, and halt investments in foreign subsidiaries or offshore ventures.
This temporary suspension, according to the CBN, is part of a broader strategy to reinforce capital buffers, improve balance sheet resilience, and ensure prudent capital retention within the banking sector.
The directive applies specifically to banks currently benefitting from forbearance in relation to credit exposures and Single Obligor Limit (SOL) breaches conditions that suggest potential stress in the affected institutions.
A new research note by Renaissance Capital has revealed that several of Nigeria’s most prominent banks are facing significant exposure to regulatory forbearance loans.
According to Renaissance Capital’s estimates, Zenith Bank, FirstBank, and Access Bank rank highest in terms of forbearance exposure.
The research notes that Zenith Bank carries forbearance loans equivalent to 23% of its gross loan book, FirstBank has an exposure of 14%, and Access Bank stands at 4%.
Tier-II lenders are also affected, with Fidelity Bank and FCMB carrying exposures of 10% and 8%, respectively.
In contrast, GTCO and Stanbic IBTC have zero exposure to forbearance loans, having already cleaned up their books.
GTCO, in particular, had proactively provisioned for and written off these exposures as of December 2024.
According to the report, estimates for GTCO, UBA, Fidelity, and FCMB were based on recent management engagements, while the forecast for Zenith Bank was drawn from a December 2024 interaction.
