The Central Bank of Nigeria (CBN) has directed all banks under regulatory forbearance to suspend dividend payments to shareholders and defer bonuses for directors and top management. The directive also prohibits such banks from investing in foreign subsidiaries or launching new ventures abroad.
This move was communicated in a circular dated June 13, 2025. The document, signed by Olubukola Akinwunmi, Director of the CBN’s Banking Supervision Department, is titled “Letter to All Banks: Temporary Suspension of Dividend Payments, Bonuses and Investment in Foreign Subsidiaries.”
According to the CBN, the directive is a necessary measure to protect the Nigerian banking sector, particularly banks currently benefiting from credit-related forbearance or waivers on Single Obligor Limits. These banks, the CBN says, need to build up stronger capital buffers and improve their internal financial resilience.
The CBN recently assessed the capital health and provisioning levels of these banks and found the need to impose stricter oversight to prevent weaknesses in the system.
CBN Moves to Preserve Capital and Reinforce Internal Stability
The directive aims to ensure that banks retain enough internal resources to meet both short-term and future obligations. The CBN said the suspension will remain in place until each affected bank exits the forbearance regime and undergoes an independent evaluation confirming compliance with current capital adequacy standards.
“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 said.
The bank said this is not an isolated action. It is part of a larger supervisory effort to restore sound risk management practices across the industry. The decision also aligns with ongoing reforms that seek to prepare Nigerian banks for the capital requirements expected by 2026 under the recapitalisation agenda.
The apex bank promised to continue monitoring the situation. It also said it will engage banks throughout the transition period to ensure full compliance and financial stability.
Past Regulatory Controls and Growing Monetary Pressures
This is not the first time the CBN has introduced strict controls to protect the banking sector. In April 2022, the bank extended interest rate waivers for restructured loans by one year. Then in September 2023, it stopped banks from using foreign exchange revaluation gains for dividends or major spending.
The new policy deepens these restrictions. It now covers how banks manage and distribute profits, who receives rewards, and where their capital is invested.
The CBN’s latest directive comes as the Nigerian financial system battles inflation, currency instability, and rising exposure to high-risk sectors. These pressures have forced banks to rethink how they handle liquidity, credit, and overall financial strategy.
Industry Outlook Amid Compliance Requirements
The new directive could slow down immediate shareholder returns and expansion plans for some institutions. However, it may help to ensure long-term survival by making banks more conservative in their operations.
In its Article IV report last year, the International Monetary Fund (IMF) encouraged the CBN to roll back some of the regulatory forbearance introduced during the COVID-19 pandemic. The fund argued that such support mechanisms, while useful during crises, should not become long-term substitutes for sound banking practices.
With this decision, the CBN is sending a clear message that it expects banks to be cautious, retain profits, and stay focused on maintaining strong capital positions.
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