The Central Bank of Nigeria (CBN) is set to intensify its supervision of banks, focusing on corporate governance, asset quality, liquidity, large exposures, and the ability of lenders to withstand operational and cyber disruptions. This move is part of the next phase of banking-sector reforms following the completion of the two-year recapitalisation programme. The programme saw 33 banks meet the revised minimum capital requirements and raise a combined N4.65 trillion.
The CBN said the stronger capital base would only deliver lasting benefits if banks improve the way they are governed and manage risks. Deputy Governor, Corporate Services, CBN, Dr. Muhammad Sani Abdullahi, said the banking industry must now move beyond raising capital to ensuring that the new capital is protected and deployed responsibly. He emphasized that boards and management must maintain sound controls, recognise risks early, and lend on the strength of viable projects.
According to Abdullahi, corporate governance must support the stronger capital position of banks, with boards and management expected to operate with integrity, accountability, and transparency while strengthening internal controls and avoiding excessive risk-taking. The decisions taken by bank boards and management must protect the interests of depositors, investors, and other stakeholders. The CBN will continue to monitor governance, asset quality, liquidity, and large exposures as banks enter the post-recapitalisation era.
The CBN’s position reflects a shift in focus from the size of banks’ balance sheets to the quality of their management and their ability to withstand shocks. Risk management must no longer be restricted to traditional credit risks but must cover market and liquidity risks, operational failures, cybersecurity, dependence on third-party service providers, and climate-related financial risks. Abdullahi said banks needed systems capable of identifying such risks early and allowing management to act before they threaten the stability of individual institutions.
The CBN official said the importance of these safeguards had increased as banks adopt more technology in delivering financial services. Customers must be able to transact securely and access their funds even when banks experience technical or operational difficulties. The Bank’s supervisory framework will also continue to rely on risk-based supervision, macroprudential monitoring, and stress testing. Financial-sector coordination, consumer protection, fintech regulation, and crisis preparedness and resolution planning will remain part of its supervisory priorities.
The new approach comes as the banking industry emerges from a recapitalisation programme announced in March 2024. Under the programme, banks were given two years to raise capital appropriate to their respective licences. Abdullahi said the exercise was designed to strengthen the capacity of banks to support the economy as wider monetary and financial reforms took effect. The recapitalised banks will be expected to provide more financing for infrastructure, industrial expansion, international trade, and other productive activities as Nigeria pursues its ambition of building a $1 trillion economy by 2030.
The CBN also wants the benefits of stronger banks to extend to rural communities, women, and young entrepreneurs, saying financial inclusion and consumer protection are important parts of a resilient financial system. The post-recapitalisation phase is also expected to place greater responsibility on businesses seeking bank financing. The CBN urged business leaders to improve corporate transparency, governance, and sustainability, noting that these factors increasingly influence how banks assess borrowers.
Key points
- The CBN will intensify supervision of banks with a focus on corporate governance and risk management.
- The banking industry must move beyond raising capital to ensuring that the new capital is protected and deployed responsibly.
- The CBN’s supervisory framework will rely on risk-based supervision, macroprudential monitoring, and stress testing.
