In a sweeping move to reinforce the health of Nigeria’s banking system, the Central Bank of Nigeria (CBN) has directed banks currently operating under regulatory forbearance to suspend dividend payments to shareholders, bonuses to directors and senior management, and halt any new investments in foreign subsidiaries.
The directive, contained in a circular signed by Olubukola Akinwunmi, Director of Banking Supervision, on Friday, is part of a broader effort to “strengthen capital buffers and promote prudent capital retention across the sector.”
- In a sweeping move to reinforce the health of Nigeria’s banking system, the Central Bank of Nigeria (CBN) has directed banks currently operating under regulatory forbearance to suspend dividend payments to shareholders, bonuses to directors and senior management, and halt any new investments in foreign subsidiaries.
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Regulatory forbearance is a temporary suspension or relaxation of certain regulations by a government or regulatory body during times of economic hardship or crisis. The measure is normally implemented to provide relief to individuals, businesses, or financial institutions facing financial difficulties.
With the March 2026 deadline for meeting new capital requirements looming, the central bank’s latest supervisory action reflects its cautious approach to stabilising a system still recovering from macroeconomic shocks and internal vulnerabilities.
“Retain Internal Resources to Meet Obligations”
According to the CBN, the suspension is targeted specifically at lenders that are “benefiting from forbearance on credit exposures and single obligor limits (SOL)”, measures initially designed to give banks breathing space during sector-wide restructuring.
The CBN stressed: “This supervisory measure is intended to ensure that internal resources are retained to meet existing and future obligations and to support the orderly restoration of sound prudential positions.”
In essence, banks under temporary regulatory relief must now redirect all available resources towards shoring up their balance sheets. Shareholder dividends and executive bonuses, typically seen as signs of financial strength, are to be put on hold. The message appears to be: recovery before reward.
Furthermore, the apex bank cautioned that the suspension will remain “until such a time as the regulatory forbearance is fully exited and the banks’ capital adequacy and provisioning levels are independently verified to be fully compliant with prevailing standards.”
Curbing Offshore Expansion Amid Capital Pressure
The ban on new foreign investments sends a strong signal about the need to limit external exposures during this recalibration period. While some banks had previously looked abroad for growth and diversification, the CBN is insisting that all expansion plans be paused.
By freezing offshore ventures, the regulator aims to protect capital from being diverted at a time when it is most needed domestically. The directive reinforces the principle that “internal capital must be retained” and deployed in a way that supports stability, not speculation.
This caution also ties into the CBN’s push for banks to prepare for the new minimum capital requirements set to take effect in 2026. Until banks demonstrate full compliance with capital and provisioning benchmarks, aggressive risk-taking is off the table, the apex bank said.
Short-Term Pain, Long-Term Discipline amid CBN Dividend Suspension
For shareholders, particularly institutional investors, the halt in dividends may dampen enthusiasm, especially for banks with a history of consistent payouts. Likewise, directors and senior management will have to forgo performance-related bonuses, tightening executive incentives.
Yet, the longer-term benefit lies in the strengthening of banks’ capital bases and risk management practices. The CBN has taken similar steps in recent years, including a 2023 directive prohibiting banks from using revaluation gains on the naira to fund operations or pay dividends. That move foreshadowed the current approach.
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Importantly, the regulator has pledged to remain engaged, stating that it “will continue to monitor compliance and work closely with affected institutions.”
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