Nigeria: CBN Mandates Banks to Submit Capital Restoration Plans Amid Forbearance Exit

The Central Bank of Nigeria (CBN) has issued a directive requiring banks to submit detailed Capital Restoration Plans as part of its regulatory strategy to wind down the forbearance regime introduced during recent financial pressures.

In a circular signed by Olubukola Akinwunmi, Director of Banking Supervision, and published on the apex bank’s website, the CBN outlined a series of coordinated actions aimed at restoring capital adequacy and regulatory compliance across the banking sector.

According to the circular, banks affected by the forbearance regime must submit their Capital Restoration Plans within 10 working days following the end of each quarter, effective from June 30, 2025.

“The plan should detail management’s proposed strategies to restore full regulatory compliance,” the CBN stated. “This includes cost optimisation, risk asset reduction, significant risk transfers, and necessary business model changes.”

The restoration plan must span the entire recovery period until each bank returns to full compliance with capital adequacy and asset quality benchmarks. Submissions will be subject to regulatory scrutiny and approval, and will form the basis for ongoing supervisory engagement and monitoring.

Additional Compliance Measures

In tandem with the restoration plans, the CBN announced a series of regulatory conditions for affected banks:

• Termination of forbearance exposures and Single Obligor Limits waivers

• Suspension of dividend and bonus payments

• Restriction on investments in foreign subsidiaries

The CBN has also mandated banks to begin quarterly disclosures—starting June 30, 2025—on critical capital metrics to enhance regulatory transparency and oversight. Required disclosures include:

• Detailed provisioning status and reconciliation of affected credit exposures

• Capital Adequacy Ratio (CAR) calculations, both with and without transitional reliefs

• Classification migration data for restructured or impacted loan facilities

• Full disclosure of Additional Tier 1 (AT1) instruments, including terms of issuance and usage conditions

These measures, the CBN noted, represent a decisive but supportive approach to conclude the regulatory forbearance era.

“This framework reflects the Bank’s unwavering commitment to macro-financial stability, sound banking practices, and forward-looking supervision,” the circular added.

The directive signals a new phase of risk-based regulatory enforcement, as Nigeria’s financial authorities move to fortify the resilience of the banking sector in line with evolving economic realities.