The Central Bank of Nigeria recently issued a directive instructing certain banks—notably those benefiting from regulatory forbearance—to suspend dividend payouts, defer bonuses for directors and senior executives, and halt investments in offshore subsidiaries.
This move, announced on 13 June 2025, aims to consolidate banks’ capital base by ensuring they retain internal funds, reinforce liquidity, and comply with prudential single-obligor limits and provisioning requirements.
Central to the policy is the need for banks to prove adequacy in capital and buffers before dividends or bonuses can resume. The freeze stays until independent verification of their financial health is confirmed.
CBN’s strategy reflects global best practices in post-crisis recovery. The regulator clarified that this approach is part of its ongoing reform framework, aimed at long-term sector stability, and not a sign of systemic failure.
While analysts and market players support the caution—stressing the importance of focusing on real (cash) profits rather than accounting earnings—the directive has unsettled investors. Some bank stocks have fallen sharply in response.
From a regulatory standpoint, the policy is less punitive and more precautionary: a temporary protective measure to ensure that banks fully exit forbearance, shore up capital buffers, and align with 2026 recapitalisation standards.
