CBN Tightens Capital Rules: Nigeria’s Banks Face the Wake-Up Call
- FirstHoldCo’s $887 Million Problem
Nation’s central bank isn’t playing games. A recent “Cash is King” report by Renaissance Capital revealed FirstHoldCo is sitting on nearly $887 million in forbearance about 14% of its assets
That’s a sick balance sheet symptom showing up on NGX. The Banking Index slid 4% to 1,169.74 points the day the markets saw the news. And it gets worse: the CBN has frozen dividends, bonuses, and foreign ventures at banks under forbearance until they clean up their loan books.
This is part of Governor Cardoso’s “orthodoxy return” a push to make banks stockpile capital, fully provision risky loans, and boost transparency.
- FCMB’s Pre-emptive Loan-to-Equity Move
FCMB Group is sprinting ahead to avoid the crunch. The bank announced it’s converting a ₦23.1 billion loan into equity to fix a Single Obligor Limit breach by September 30, 2025 .
This action slashed FCMB’s forbearance exposure from ₦538.8 billion (Sept ‘24) to ₦207.6 billion as at May 31, 2025 a giant 60% haircut. Once converted and audited, the equity boost will raise its capital base to about ₦267 billion, keeping it well above the required 15% capital threshold.
“Over 60% of our forbearance-linked credit is now cleared,” says FCMB
They expect a modest temporary rise in high-risk loans but project recovery below 10% before year-end. By showing proactive measures, FCMB is shaping itself as a leader in this regulatory reset.
- Zenith’s June 30, Exit Target
Zenith Bank isn’t waiting. They’ve confirmed they’ll fully exit CBN forbearance by June 30, having already surpassed the ₦500 billion capitalization minimum
Their exposure is limited to one major obligor and two additional customers all fully provisioned. Zenith expects to resume dividends in 2025, once verification completes
Renaissance Capital pegs Zenith’s forbearance exposure at an estimated $1.6 billion, the highest among Nigerian banks but its size and strategic handling give it an edge.
Market Response & Sector Risks
The CBN decree shook the Nigerian Exchange: the All-Share Index dropped N183 billion on June 17.
Analysts believe this could be a buying opportunity for long-term investors, especially in banks proactively resolving their exposure.
Renaissance Capital warns that, under a 10% stress on forbearance assets, capital adequacy ratios (CAR) could dip across the board but strong provision buffers in banks like GTCO and Zenith soften the blow.
Financial Juggernut’s Verdict
This isn’t just a policy shift it’s a banking sector rebirth:
- Survivors will thrive
Banks like Zenith and FCMB who act fast will regain dividends, investor trust, and stronger capital buffers. - Laggards risk being sidelined
FirstHoldCo, with its size and loan exposure, faces tougher recovery ahead. - Banking stock remains a show of resilience
The CBN aims for solidity over shareholder payouts investors must align with that vision.
The future of Nigeria’s banking hinges on this reset. Strength restored via solvency, transparency, and discipline those who embrace orthodoxy first will define the next generation of Nigerian banking
