The Central Bank of Nigeria (CBN) has 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.
The directive of the central bank stated that the suspension will remain until it is able to independently verify the capital adequacy of the banks.
Thus, based on the directive, affected banks under regulatory forbearance must:
These restrictions will remain in place until the affected banks fully exit the forbearance regime, and only after their capital adequacy and provisioning levels are independently verified to meet prevailing regulatory standards.
Naijaonpoint analysts suggest the CBN appears to be signaling a shift from relief to discipline.
The Nigerian banking sector is currently undergoing a major recapitalization push, with new capital thresholds set to be implemented in phases up to 2026.
Thus, the move indicates the need for capital preservation, especially in light of FX volatility, inflation, and exposure to risky sectors.
This is the latest in a series of increasingly tight controls by the apex bank aimed at reining in excessive risk-taking and capital mismanagement by banks.
This latest directive now expands the restriction, not just to how profits are used, but who can receive them and where they can be invested.