•Banks’ shares dipped further

James Emejo in Abuja,NumeEkegheandKayodeTokede in Lagos

In a move aimed at calming market jitters and ensure smooth transition from regulatory forbearance, the Central Bank of Nigeria (CBN) yesterday  affirmed strength of the Nigerian bank sector revealing that it  issued routine transitional guidance to banks navigating post-forbearance adjustments.

Precisely, the central bank stated that the time-bound measures are for some banks still completing their transition from the temporary regulatory support it had provided them.

In a statement signed by its Acting Director, Corporate Communications, Mrs. HakamaSidi Ali, the apex bank stated that the step was part of the CBN’s broader, sequenced strategy to implement the recapitalisationprogramme announced in 2023.

Still reeling from the effect of the policy, the Nigerian equities market extended losses yesterday, as the NGX All-Share Index declined by 0.30 percent to close at 114,910.16 points. Market capitalisation also declined by 0.25 percent and closed at N72.50 trillion.

Sustained investor sentiment on the back of the CBN forbearance circular was the primary driver of the negative sentiment as United Bank for Africa shares dipped by 5.57 percent to close at N32.20 per share; FIRSTHOLDCO dipped by 4.15 percent to close at N25.40 per share, Access Corporation shares also depreciated by 2.2 percent to N20.05 per share, and Fidelity Bank dipped by 0.55 per cent to close at N18.20 per share.

The CBN explained, “The programme, designed to align with Nigeria’s long-term growth ambitions, has already led to significant capital inflows and balance sheet strengthening across the sector. Most banks have either completed or are on track to meet the new capital requirements well before the final implementation deadline of March 31, 2026.

“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.

“To support a smooth transition, the CBN has allowed limited, time-bound flexibility within the capital framework, consistent with international regulatory norms. Nigeria generally maintains Risk-Based Capital requirements that are significantly more stringent than the global Basel III minimums. “

“For example, Nigerian international banks are required to hold a minimum Tier 1 capital of 11.25 percent of the bank’s risk-weighted assets, nearly double the Basel III benchmark of six percent.

“These adjustments reflect a well-established supervisory process, consistent with global norms. Similar transitional measures have been implemented by regulators in the U.S., Europe, and other major markets as part of post-crisis reform efforts,” it added.

In a circular dated June 13, 2025, and signed by Director of Banking Supervision, Dr. OlubukolaAkinwunmi, the CBN had instructed all banks currently under regulatory forbearance to suspend the payment of dividends to shareholders, bonuses to directors and senior executives, and investments in offshore subsidiaries or new foreign ventures.

The move, according to the apex bank, was part of a broader strategy to ensure that banks operating under forbearance supervision strengthened their financial resilience and fully complied with capital adequacy and loan provisioning standards.

CBN had emphasised that the restrictions were temporary and will be lifted once key conditions were met, a full exit from regulatory forbearance, and independent verification of capital and provisioning levels as being within acceptable regulatory thresholds.

The new CBN directives were designed to ensure full provisioning for high-risk exposures and improve cash-based profitability metrics.

In the latest statement, the CBN stressed that it remains fully committed to continuous engagement with stakeholders throughout this period via the Bankers’ Committee, the Body of Bank CEOs, and other industry forums, adding that the goal was to ensure a transparent, predictable, and collaborative regulatory environment.

“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 CBN will continue to take all necessary actions to safeguard the sector’s stability and ensure a robust, resilient financial ecosystem that supports sustainable economic growth,” it added.

THISDAY had reported that the genesis of the matter was that during the COVID-19 crisis, the CBN granted forbearance to the entire banking industry to enable banks withstand the challenge posed by the pandemic.

However, the industry regulator had given a deadline of December 2024 to phase out the policy. This saw some industry players putting pressure on CBN to extend it by another year, but the CBN Governor, Mr. Olayemi Cardoso, maintained that in line with his return to orthodoxy, he would not extend the deadline, which made him to give all operators six months extra, which expires this month.

THISDAY learnt that Cardoso believed banks should not be paying dividends and bonuses to shareholders and directors while carrying forbearance.

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