Nigerian banks with foreign subsidiaries may be forced to restructure their African operations if the Central Bank of Nigeria proceeds with its proposed new rules for Financial Holding Companies, Fitch Ratings has warned. The global rating agency said the proposed framework could require several Nigerian banking groups to change how they own and control their offshore banking subsidiaries. This warning comes as major Nigerian banks, including UBA, continue to expand their operations across African and other international markets.
Under the current Nigerian structure, foreign banking subsidiaries are directly owned by the domestic banking entity. Fitch said this differs from the model used by most major African banking groups, where a holding company directly owns the domestic bank, foreign banking businesses, and non-bank financial services subsidiaries. Nigerian and Moroccan banking groups have a different structure, with the domestic banking entity having shareholdings in the foreign banking subsidiaries.
The proposed framework could require affected banks to fundamentally realign their ownership structures. Fitch believes that if effected, these regulations could prompt several organisational restructurings. Under the proposed framework, Nigerian banks with offshore subsidiaries could be required to transfer ownership of those businesses from the operating bank to the financial holding company.
Where direct ownership by the parent holding company is impractical, banks may instead have to establish or utilise an intermediate holding company through which their foreign subsidiaries would be held. For Nigerian lenders with extensive cross-border networks, such changes could affect group structures, capital allocation, governance arrangements, and the way foreign subsidiaries are consolidated and managed.
The proposed changes come at a time when Nigerian banks are increasing their presence in markets across Africa, making the ownership structure of their international operations increasingly important to investors and regulators. Fitch said cross-border expansion by African banking groups is expected to continue, but noted that the pattern is not uniform across the continent.
While Nigerian banks have expanded aggressively into other African markets, Nigeria itself has attracted relatively limited interest from other African banking groups seeking to establish operations. The rating agency attributed this partly to the strength of incumbent Nigerian lenders, macroeconomic challenges, and regulatory requirements. Nigeria's banking sector remains moderately concentrated, with the five largest banks accounting for 52 per cent of domestic banking sector assets at the end of 2025.
The final impact on individual banks will depend on the provisions ultimately adopted by the CBN and how existing banking groups are required to transition to the new structure. The CBN's objective is to strengthen corporate governance, ring-fence risks, and establish clearer separation between financial holding companies and their operating subsidiaries. For investors, the proposed FHC rules could become an important consideration for Nigerian banks with sizeable offshore operations.
Key points
- Nigerian banks may need to restructure foreign subsidiaries under new rules
- Proposed framework could require banks to change ownership structures
- Changes could affect group structures, capital allocation, and governance arrangements
