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In a letter dated 20 June 2025 and addressed to all banks, the Central Bank of Nigeria (CBN) outlined six transitional measures designed to support affected banks to exit from the regulatory forbearance regime, which was introduced to help banks manage their credit exposures and maintain stability during the COVID-19 pandemic.
7 July 25
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The measures as outlined in the letter are:
(a) the termination of all COVID-19 related regulatory forbearance and waivers on Single Obligor Limits (SOL) effective from 30 June 2025;
(b) temporary lift of the current regulatory caps on the recognition of Additional Tier 1 (AT1) capital in the Capital Adequacy Ratio (CAR) computation from 30 June 2025 to 31 March 2026;
(c) suspension of dividend payments, bonuses to directors and senior management and investments in foreign subsidiaries until capital levels and provisioning are fully restored to the regulatory threshold;
(d) quarterly disclosure requirement for all banks of all their credit related exposures, CAR calculations, classification migration data for restructured or impacted loans, AT1 instruments including issuance terms, usage and related conditions,
(e) submission of Capital Restoration Plan and (f) proactive engagement with the CBN for guidance and alignment throughout the transition.
The letter states that the quarterly disclosure should be submitted by all banks, not later than 10 working days from the end of a quarter, with effect from June 30. This means that all banks have until 14 July 2025 to comply with this requirement. In the same vein, all banks that are under the CBN forbearance regime are required to submit their Capital Restoration Plan to the Director of Banking Supervision on or before 14 July 2025.
The Capital Restoration Plan is expected to serve as a roadmap outlining how affected banks intend to restore their financial soundness and comply with all relevant capital and asset quality standards. The plan should include:
a. Cost Optimisation Initiatives;
b. Risk Asset Reduction;
c. Significant Risk Transfers; and
d. Necessary business model adaptations.
Once reviewed and approved, the plan will form the basis for continued regulatory supervision, monitoring and engagement throughout the transition.
Should you have any questions regarding this article series, please do not hesitate to contact Funmilayo Otsemobor.
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Contributor
Adeyemi Ayeku – Associate