CBN suspends dividend payments, foreign investments for banks under regulatory forbearance

The Central Bank of Nigeria (CBN) has ordered banks currently operating under regulatory forbearance to suspend dividend payments to shareholders and bonuses to directors and senior management.

In a circular signed by Olubukola Akinwunmi, director of banking supervision, on Friday, the CBN said the directive aims to strengthen capital buffers and promote prudent capital retention across the sector.

Regulatory forbearance is a temporary suspension or relaxation of certain regulations by a government or regulatory body during times of economic hardship or crisis.

The measure is normally implemented to provide relief to individuals, businesses, or financial institutions facing financial difficulties.

The regulator also directed the affected banks to halt new investments in foreign subsidiaries or offshore ventures.

According to the circular, the move targets lenders benefiting from forbearance on credit exposures and single obligor limits (SOL) — part of a broader transitional arrangement by the CBN to stabilise the banking industry following macroeconomic shocks and sector-wide restructuring.

“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 reads.

“This supervisory measure is intended to ensure that internal resources are retained to meet existing and future obligations and to support the orderly restoration of sound prudential positions.”

The CBN said it would continue to monitor compliance and work closely with affected institutions.

The apex bank stressed that the policy is designed to ensure internal capital is retained to meet obligations and support a return to sound prudential footing.

The development comes as banks push to meet the new capital thresholds expected to take effect in March 2026.

The affected commercial banks are expected to comply fully with the new directive and adopt prudent capital management practices during this period.

The central bank had taken similar steps in the past to strengthen the financial system.

In 2020, the CBN directed all deposit money banks in the country to restructure loan terms and tenors to households and businesses affected by the coronavirus outbreak.

In March 2021 and April 2022, the apex bank extended interest rate forbearance on loans by 12 months.

The financial regulator also intervened in 2023 when it asked deposit money banks (DMBs) to stop utilising gains from the revaluation of the naira to pay dividends or finance operations.