The Central Bank of Nigeria (CBN) has issued routine transitional guidance for a small number of Nigerian banks that are still completing their transition from temporary regulatory support, mostly provided in response to the economic impact of the COVID-19 pandemic. This announcement was made in a statement on Tuesday by the CBN’s Acting Director of Corporate Communications, Hakama Sidi Ali.
Key Measures and Objectives
- The guidance includes temporary restrictions on capital distributions, such as dividends and bonuses, to encourage the retention of internally generated funds and strengthen banks’ capital adequacy.
- These time-bound measures are part of the CBN’s broader, sequenced strategy to implement the recapitalization program announced in 2023, designed to align with Nigeria’s long-term growth ambitions.
- Most banks have either completed or are on track to meet the new capital requirements ahead of the final deadline of March 31, 2026.
- The affected banks have been formally notified and remain under close supervisory engagement by the CBN.
Context and Impact
- The recapitalization program aims to bolster the resilience and stability of Nigeria’s banking system by ensuring stronger capital buffers.
- The CBN has allowed limited, time-bound flexibility within the capital framework, consistent with international regulatory norms such as Basel III.
- Similar transitional measures have been implemented by regulators in other major markets, including the U.S. and Europe, as part of post-crisis reforms.
- The announcement follows earlier regulatory actions, including a ban on dividend and bonus payments by some banks, which had caused concern in Nigeria’s financial sector and led to a bearish trend in banking stocks on the Nigerian Exchange.
The CBN’s proactive supervisory approach seeks to ensure a smooth transition for banks still adjusting to the new capital regime, thereby safeguarding the soundness of the financial sector and protecting depositors’ interests.
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