The Central Bank of Nigeria (CBN) is set to intensify its supervision of banks, with greater attention to corporate governance, asset quality, liquidity, large exposures and the ability of lenders to withstand operational and cyber disruptions.
The move is part of the next phase of banking-sector reforms following the completion of the two-year recapitalisation programme, which 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.
Speaking at the 38th Seminar for Finance Correspondents and Business Editors in Abuja yesterday, the Deputy Governor, Corporate Services, CBN, Dr. Muhammad Sani Abdullahi, said the banking industry must now move beyond the issue of raising capital to ensuring that the new capital is protected and deployed responsibly.
He said: ‘Capital, however, is a starting point. Boards and management must maintain sound controls, recognise risks early and lend on the strength of viable projects.’
According to him, 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.
He said the decisions taken by bank boards and management must protect the interests of depositors, investors and other stakeholders.
The Deputy Governor said the CBN would continue to monitor governance, asset quality, liquidity and large exposures as banks enter the post-recapitalisation era.
He added that banks would also be expected to protect customer data, maintain reliable payment services and recover quickly when their systems are disrupted.
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.
The banking regulator said 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.
‘As more financial services move to digital channels, banks must invest continuously in cybersecurity, data protection, disaster recovery and business continuity,’ he said.
The CBN official said the importance of these safeguards had increased as banks adopt more technology in delivering financial services.
He said 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.
The CBN said financial-sector coordination, consumer protection, fintech regulation, responsible innovation, crisis preparedness and resolution planning would 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.
He said the recapitalised banks would 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.
But the CBN said the success of the exercise should not be measured simply by the amount of money raised by banks.
According to Abdullahi, the real benefit should be reflected in the quality of banking services and the volume of productive lending available to businesses and households.
‘Agriculture, manufacturing, services and infrastructure need finance suited to their cash flows and investment horizons,’ he said.
He added that smaller businesses and households should have access to dependable payment systems, appropriate financial products and fair treatment.
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.
Abdullahi said stronger bank balance sheets should eventually translate into wider access to finance and better services for customers.
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.
The Deputy Governor said businesses must be prepared to use the additional financing capacity of banks for productive investment in areas such as technology, energy, transportation, power, agriculture, manufacturing and services.
The CBN’s latest position was reinforced by the Director, Banking Supervision Department, Dr. Olubukola Akinwunmi, who said recapitalisation should be seen as the beginning of a new phase rather than the final objective of banking reform.
Akinwunmi said a bank could have adequate capital and still be exposed to serious weaknesses arising from poor governance, weak risk management, deteriorating loan quality, liquidity pressures, operational failures, cyber threats and excessive risk-taking.
He said this was why capital adequacy alone could not guarantee financial resilience.
The banking supervisor placed particular importance on corporate governance, saying poor governance could trigger a chain of problems beginning with weak lending decisions and ending with losses that erode bank capital.
The presentation linked poor governance with weak underwriting, deteriorating asset quality, declining confidence and liquidity pressure.
Akinwunmi also drew attention to insider lending, which the CBN has been monitoring more closely under its strengthened supervisory framework.
He referred to the insider-credit circular issued in February 2025, saying the regulator’s approach was intended to prevent transactions involving insiders from creating risks capable of weakening banks.
He said the CBN’s position was that corporate governance was central to the resilience of the banking system.
The banking regulator has also been strengthening its corporate-governance framework.
Akinwunmi said the current framework is anchored on the CBN’s 2023 corporate-governance guidelines covering commercial banks, merchant banks, non-interest banks, payment service banks and financial holding companies.
The guidelines, which took effect on August 1, 2023, provide requirements covering board composition and independence, risk governance, internal controls, ethical conduct, accountability and the responsibilities of directors and senior management.
The CBN is also paying greater attention to the suitability of individuals moving into senior management positions in banks.
Akinwunmi said the quality of people occupying senior positions matters because their decisions can affect the ability of a bank to remain a viable institution.
He said weak appointments could result in poor risk management, inappropriate lending and decisions capable of eroding shareholders’ and depositors’ funds.
Beyond governance, the CBN is introducing a more risk-sensitive approach to capital requirements.
Under the risk-based capital framework issued in March 2026, banks are expected to maintain capital that reflects the risks associated with their individual business models and activities.
This means that the capital requirement of one bank may differ from that of another where their risk exposures are different.
Banks with higher levels of concentration risk, foreign exchange exposure, governance weaknesses or complex business activities are expected to maintain higher capital buffers.
The framework is intended to ensure that banks hold not merely more capital, but sufficient capital for the risks they undertake.
The CBN is also using stress testing to assess how banks would perform under difficult economic and financial conditions.
The tests cover possible shocks such as high inflation, exchange-rate depreciation, economic recession, rising interest rates, higher loan defaults, cyberattacks and market disruptions.
The purpose is to identify weaknesses early and determine whether banks have sufficient capital, liquidity and risk-management systems to withstand severe but plausible shocks.
The CBN is also moving away from prolonged regulatory forbearance that was introduced during periods of severe economic stress.
Akinwunmi said the temporary relief had played a role in protecting financial stability and sustaining credit during difficult periods, but was never intended to become a permanent feature of banking regulation.
The regulator’s withdrawal of forbearance is intended to ensure that banks recognise problem loans promptly, maintain adequate capital and present a more accurate picture of their financial condition.
The CBN said the return to normal prudential standards, combined with recapitalisation, stronger governance and risk-based supervision, would help create a banking system better prepared to withstand future shocks.