As Nigeria advances towards its deadline for bank recapitalization of March 2026, the Central Bank of Nigeria (CBN) has announced a decisive ending of regulatory tolerance and exemptions of regulatory loans of the COVID era, indicating a return to a stronger supervision and stronger capital standards.
In a circular dated June 20, 2025 and signed by the Banking Supervision Director, Dr. Olubukola Akinwunmi, the CBN directed all banks with capital deficit to present detailed capital restoration plans for Monday, July 14, 2025-10 business days after the end of the first quarter.
The new measures marked the conclusion of exemptions of the pandemic era, including those of the limits of the unique debtor (sun) and regulatory tolerance. As of June 30, 2025, all credit exhibitions must fully comply with existing prudential guidelines and applicable regulations.
To support the cleaning of the quality of the assets, the CBN allows the immediate cancellation of totally provisioned loans linked to previous tolerance measures, renouncing the retention rule of one year. This is expected to reduce loan relationships without performance (NPL) and improve the general health of assets.
In addition, the CBN has temporarily increased the limits in the recognition of capital calculations of the capital adaptation ratio (AT1) of level 1 additional in the calculations of the capital adaptation ratio (CAR) from June 30, 2025 until March 31, 2026. This is aimed at strengthening capital shock absorbers during the transition, but does not replace the broader recapitization program initiated in March 2024.
Restrictions prior to dividend payments, executive bonds and foreign investments remain in force until capital levels and supply are completely restored.
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Banks must also send quarterly disseminations that detail the provisioning status, reconciled credit exhibitions, car figures with and without reliefs and instruments of AT1 instruments.
Capital plans must describe strategies such as cost reduction, asset reduction, risk transfers and business model settings, and will be subject to regulatory approval and continuous supervision review.