The Digest:
The Central Bank of Nigeria (CBN) has directed banks to submit detailed Capital Restoration Plans within 10 working days after each quarter ends, beginning with June 30, 2025. This directive is part of efforts to stabilize the financial system post-pandemic.
Key Points:
- Banks must submit capital restoration plans detailing strategies to return to regulatory compliance.
- The plans should include cost-cutting initiatives, asset quality improvements, and business model adjustments.
- CBN ends all COVID-19-era regulatory forbearance and waivers on Single Obligor Limits (SOL) effective June 30, 2025.
- Banks can now reduce Non-Performing Loans (NPLs) faster by waiving the one-year retention rule for fully provisioned loans.
- Regulatory caps on Additional Tier 1 (AT1) capital for Capital Adequacy Ratio (CAR) calculations will be lifted until March 31, 2026.
- Banks benefiting from transitional reliefs are prohibited from paying dividends or bonuses to directors until capital restoration is achieved.
- Quarterly disclosures on provisioning status, CAR calculations, and loan classifications are now required.
To strengthen Nigeria’s financial system, the CBN has outlined a roadmap for banks to restore capital and asset quality following the end of COVID-19-related forbearances. These new directives aim to stabilize the banking sector and promote greater transparency.
Sources: THISDAY, Vanguard
