The Central Bank of Nigeria (CBN) has issued a directive ordering Nigerian banks under regulatory forbearance to suspend dividend payments and bonuses to their foreign subsidiaries and ventures.
The directive, contained in a circular released on Friday by Olubukola Akinwunmi, the director of banking supervision, forms part of the apex bank's broader strategy to strengthen capital buffers, enhance balance sheet resilience, and ensure prudent capital retention within Nigeria's banking sector.
According to the CBN, "This temporary suspension is 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."
The circular further explained that "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."
Recapitalization Context
This development comes as Nigerian banks intensify efforts to meet the CBN's recapitalization deadline set for 2026. The directive aligns with previous regulatory measures implemented by the apex bank to strengthen the financial sector.
In April 2022, the CBN extended interest rate forbearance on loans by twelve months. Later, in September 2023, it prohibited banks from utilizing gains from foreign exchange revaluation for dividends or other capital expenditures.
Financial analysts view these measures as critical steps toward ensuring Nigerian banks maintain adequate capital reserves during the ongoing recapitalization process, particularly as the economy navigates challenging macroeconomic conditions.
The directive is expected to affect several Nigerian banks with significant foreign operations across Africa and beyond, potentially impacting their international investment strategies in the short term while strengthening their domestic financial positions.
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