The share prices of most listed banks on the Nigerian Exchange plunged Monday following the Central Bank of Nigeria’s directive to Deposit Money Banks currently operating under regulatory forbearance to suspend dividend payments, defer bonuses for directors, and halt all new investments in foreign subsidiaries or offshore ventures.
The CBN, in a circular on Friday signed by the Director of Banking Supervision, Olubukola Akinwunmi, stated that the fresh move targets lenders benefiting from forbearance on credit exposures and single obligor limits (SOL), which is part of a broader transitional arrangement by the apex bank to stabilise the banking industry following macroeconomic shocks and sector-wide restructuring.
At the time of writing this report, notable banks that declined include ZENITHBANK (-8.37%), ACCESSCORP (-9.84%), UBA (-8.71%), FIRSTHOLDCO (-9.93%), FIDELITYBK (-9.87%), FCMB (-9.60%) and WEMABANK (-8.27%).
What is regulatory forbearance? It’s a temporary measure allowing for the reduction or postponement of payments, such as loans or mortgages. This relief is typically granted to individuals, corporations, and financial institutions facing financial difficulties.
This decisive action by the CBN aims to strengthen capital buffers across the banking sector and encourage prudent capital retention.
According to the apex bank, the suspension will remain in place until the CBN can independently verify the capital adequacy of each affected bank.
“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.
“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,” the circular stated.
Ifunanya Ikueze is an Engineer, Safety Professional, Writer, Investor, Entrepreneur and Educator.
