The Central Bank of Nigeria (CBN) has issued a new strict directive aimed at strengthening the financial stability of the banking sector. In a circular dated June 13, 2025, it orders banks currently benefiting from regulatory tolerance to suspend the payment of dividends to shareholders as well as bonuses to directors and senior executives.
According to the CBN, this measure is part of ongoing efforts over the past few months to consolidate the financial health of Nigerian banks.
It is worth noting that earlier in 2025, the Central Bank had temporarily relaxed certain prudential rules, including credit risk exposure limits and requirements related to exposures to a single obligor, to help banks overcome a challenging transition period.
This decision, made in response to persistent financial risks and increased capitalization requirements, should allow Nigerian banks to strengthen their capital reserves by retaining their profits instead of distributing them.
Furthermore, the Central Bank prohibits any participation in foreign subsidiaries or offshore projects until the tolerance period is lifted and their financial situation is confirmed by an independent audit.
This decision aims to ensure that banks have sufficient internal resources to meet their obligations, improve their resilience, and support the confidence of depositors and investors in an uncertain economic and financial environment.
