Banks Get 10-Day Deadline to Submit Capital Plans — CBN

According to the Central Bank of Nigeria’s (CBN) larger plan to stabilize the financial system and phase away pandemic-era reliefs, starting on June 30, 2025, all banks must submit a comprehensive Capital Restoration Plan within 10 working days of the end of each quarter.

The CBN stated that each bank’s capital restoration plan must outline its plans for achieving full regulatory compliance, emphasizing that it is looking for cost-cutting measures, enhancements to asset quality, potential risk transfers, and adjustments to longer-term business strategies.

The central bank’s continuous attempts to terminate the regulatory forbearance framework implemented during the COVID-19 crisis include the new orders, which were detailed in a circular posted on the CBN’s website yesterday and signed by Dr. Olubukola Akinwunmi, Director of Banking Supervision.

The CBN claims that the transitional framework is intended to ensure macro-financial stability while assisting impacted banks in regaining complete prudential compliance.

According to the circular, all regulatory forbearance and waivers related to Single Obligor Limits (SOL) from the COVID-19 era will end on June 30, 2025. It stated that the goal of this is to restore risk sensitivity in credit provisioning and classification.

The rule that banks hold fully provisioned loans for a year prior to write-off has been temporarily relaxed by the apex bank to facilitate asset quality clean-up. This allows impacted banks to reduce non-performing loans (NPLs) more quickly.

The legal restrictions on Additional Tier 1 (AT1) capital recognized in the Capital Adequacy Ratio (CAR) calculation have also been temporarily removed, effective June 30, 2025, through March 31, 2026. This action is “not a substitute” for the ongoing recapitalization effort, which was announced in March, the CBN clarified.

As part of its ongoing efforts to protect the stability of the financial system and guarantee a smooth and credible transition away from the regulatory forbearance regime implemented during the COVID-19 pandemic, the Central Bank of Nigeria (CBN) announced a coordinated set of transitional measures. The purpose of these steps is to help impacted banks adhere to prudential standards while easing their withdrawal from short-term regulatory breaks.

“To supplement the above measures and ensure forward-looking capital planning, all affected banks are required to prepare and submit a comprehensive Capital Restoration Plan to the CBN on or before the 10th working day, following the end of the quarter with effect from June 30, 2025,” the statement said regarding the capital restoration plan.

“The strategy should outline the management’s suggested tactics to regain complete regulatory compliance, such as substantial risk transfers, risk asset reduction, cost optimization projects, and required business model adjustments, among others.

“The plan must span the whole time frame until capital and asset quality indicators are fully normalized.” Submitted plans will be reviewed and approved by the regulatory body and serve as the foundation for ongoing supervisory engagement and monitoring during the transition.

It further said that all COVID-19-related regulatory forbearance and waivers on Single Obligor Limits (SOL) shall be terminated on June 30, 2025, as part of recommendations published for immediate implementation and complete compliance. Restoring risk sensitivity in credit classification, provisioning, and asset quality evaluations is the goal of this stage.

All impacted credit exposures must be in conformity with the current CBN Prudential Guidelines and other applicable laws, according to the affected institutions.

“Forbearance-related facilities are temporarily exempt from the requirement to hold fully provisioned loans for a year prior to write-off in order to support asset quality cleanup.” In order to lower their Non-Performing Loan (NPL) ratios, banks may proceed with write-offs as long as the internal governance standards are fulfilled.

Regarding limitations on the utilization of transitional reliefs, it was also mentioned that banks that use these concessions must closely comply to the suspension of dividend payments in order to guarantee that retained earnings are preserved for capital strengthening and systemic risk mitigation.

In addition, it stated that investments in overseas subsidiaries and bonuses given to directors and senior management should be halted, as stated in the CBN’s June 13, 2025, circular.

According to the statement, these limitations will not be lifted until capital levels and provisions are completely brought back into compliance with regulations.

The following quarterly disclosures must be made by all banks starting on June 30, 2025, in order to enhance supervisory oversight and encourage regulatory transparency: comprehensive reconciliation of impacted credit exposures and provisioning status.

Both transitional reliefs and CAR computations are included. migration data for loan facilities that have been impacted or restructured. thorough explanation of the terms of issue, use, and associated circumstances of AT1 instruments. The CBN also stated that the submission must be received by the Director of Banking Supervision no later than 10 working days after the quarter’s conclusion, with effect from June 30, 2025.

All impacted banks were advised by the CBN to continue to consult with its Banking Supervision Department for advice during the transition. It added that it anticipates banks would fully adopt the measures, maintain strict risk management procedures, and contribute to bolstering the financial system’s stability and confidence.