Introduction
The Nigerian banking sector is pivotal to the country’s economic growth and is one of the most highly regulated sectors in Nigeria. As principal regulator, the Central Bank of Nigeria (CBN) formulates and implements policies to maintain the stability and resilience of the sector while promoting broader economic efficiency.
At the end of March 2026, the CBN’s recapitalisation directive for commercial, merchant and non-interest banks, issued pursuant to its circular dated 28 March 2024 and regarded as one of the most significant regulatory reforms in two decades, was concluded. The programme required an upward review of minimum paid-up share capital requirements across all bank categories, with a compliance deadline of 31 March 2026. Banks achieved compliance through fresh equity injections, as well as mergers and acquisitions. As at 1 April 2026, 33 banks had met the revised minimum capital thresholds.1 Further details are discussed under ‘Year in review’.
Anti-money laundering compliance saw significant CBN intervention, including the establishment of a dedicated compliance department responsible for supervising financial crimes. Key initiatives included: the Reviewed Documentation Requirements for PAPSS Transactions in Nigeria (28 April 2025); letters to bureaux de change (BDCs) operators, banks and other financial institutions reiterating AML obligations; and the Baseline Standards for Automated Anti-money Laundering Solutions for Financial Institutions in Nigeria (10 March 2026), aimed at combating money laundering, terrorism financing and other illicit financial activities. These developments are discussed further under ‘Year in review’.
Year in review
Recapitalisation 2024 to 2026 – spotlighting the increased capital requirements for banks
In March 2024, the CBN issued a circular titled, ‘Review of Minimum Capital Requirements for Commercial, Merchant and Non-Interest Banks in Nigeria’ (the Recapitalisation Circular),2 wherein it announced an upward review of the minimum capital requirements for commercial, merchant and non-interest banks.3 Accordingly, the minimum paid-up share capital for commercial banks operating at regional, national and international levels was increased from 10 billion naira, 25 billion naira and 50 billion naira4 to 50 billion naira, 200 hundred billion naira and 500 billion naira, respectively.5 For national merchant banks, there was an increase from 15 billion naira6 to 50 billion naira, while for regional and national non-interest banks an increase from 5 billion naira and 10 billion naira7 to 10 billion naira and 20 billion naira, respectively.
Banks and financial holding companies adopted various strategies to meet the revised thresholds, including rights issuances, private placements and mergers and acquisitions, collectively raising approximately 4.65 trillion naira over the 24 month programme.8 By way of example of the merger route, shareholders of Unity Bank Plc approved its proposed merger with Providus Bank Limited on 26 September 2025; further details are under ‘Control of banks and transfers of banking business’.
As at 1 April 2026, 33 banks had met the recapitalisation requirements, including Access Holdings Plc, Zenith Bank Plc, First Bank Holdings Plc, Guaranty Trust Holdings Company, United Bank of Africa, Fidelity Bank Plc and Wema Bank Plc. A limited number of institutions remain subject to ongoing merger, restructuring or licence adjustment processes to achieve full compliance with the revised minimum capital thresholds.
Foreign exchange (FX) reforms
The CBN's foreign exchange measures over the review period reflect a coherent and deliberate policy arc. Against a backdrop of persistent FX liquidity pressures and the need to rebuild Nigeria's foreign reserves, the CBN pursued targeted stabilisation measures in 2025 to improve export proceeds, attract foreign inflows, formalise retail FX market participation and reduce domestic dependence on foreign currency. By early 2026, these measures had sufficiently stabilised the FX market to enable a pivot towards liberalisation, signalled through the CBN’s removal of cash pooling restrictions on international oil companies (IOCs) in March 2026. Taken together, these reforms tell the story of a central bank that first tightened its grip on FX flows to restore stability, and then, having achieved it, began loosening that grip to reward investor confidence and encourage greater capital participation in the Nigerian economy. Complementing the export proceeds and IOC cash pooling measures described above, The CBN in 2025 also implemented targeted reforms to the bureau de change segment of the Nigerian Foreign Exchange Market (NFEM), aimed at improving market transparency, reducing FX arbitrage and encouraging the orderly participation of retail market players in the formal FX system.
Suspension of extension of export proceeds on behalf of exporters
On 8 January 2025, the CBN, in a bid to strengthen the repatriation of export proceeds for oil and non-oil exports issued the Guidelines on the Suspension of Extension of Export Proceeds on Behalf of Exporters (the Guidelines).9 The Guidelines were issued pursuant to Memorandum 10A(7), (23a) and 10B(20a) of the Foreign Exchange Manual (Revised Edition) 2018. The Guidelines significantly reduced repatriation flexibility: authorised dealers may no longer request extensions of time for repatriation of export proceeds on behalf of exporters, amending Memorandum 10A(7), which previously permitted extensions of up to 90 days. Oil and non-oil export proceeds must be credited into export domiciliary accounts within 180 days and 90 days of the bill of lading, respectively.
The Export Proceeds Suspension Guidelines aim at boosting foreign exchange liquidity in the Nigerian economy through improved compliance and enforcement.
Introduction of non-resident Nigerian ordinary account and non-resident Nigerian investment account
On 10 January 2025, the CBN introduced the non-resident nigerian ordinary account (NRNOA) and non-resident nigerian investment account (NRNIA).10 The NRNOA enables non-resident Nigerians to remit foreign earnings to Nigeria and manage funds in local and foreign currencies; the NRNIA enables investment in Nigerian assets in either currency. Both accounts are subject to applicable taxes on investment deposits, and applicants must satisfy relevant know-your-customer (KYC) requirements.
Waiver of non-refundable annual license renewal fee for existing bureaux de change
In keeping with the CBN’s efforts to liberalise the FX regime, the CBN, by a circular issued on 24 January 2025.11 The circular waived the 2025 licence renewal fee for existing BDC operators, thereby reducing the financial barrier to maintaining a formal BDC licence. The CBN sought to encourage continued and broader participation of BDC operators within the regulated FX market, thereby reducing the incentive for operators to exit the formal market and conduct transactions outside the regulatory framework. The implication of this is that any BDC operator that had already paid the 2025 renewal fee may apply to the CBN for a refund. The aim is to foster stability, transparency and efficiency in the FX market.
Sales of foreign exchange to BDC operators to meet retail market demand for eligible invisible transactions
On 3 February 2025, the CBN issued a circular extending the deadline for BDC operators to access the NFEM temporarily – to purchase FX from authorised dealers at a weekly cap of US$25,000 – from 31 January 2025 to 30 May 2025.12
The CBN issued a follow-up letter dated 5 February 2025 to all authorised dealer banks and BDC operators, setting out applicable guidelines. The letter aimed at improving price transparency and reducing arbitrage between parallel and official FX rates. Key requirements include: (1) the selling rate by authorised dealers to BDC operators is to be the prevailing NFEM day rate; (2) FX cash purchased is to be sold to FX end users at a rate not exceeding 1% margin above the buying rate, applicable to all sources of fund; and (3) authorised dealers must render weekly returns on BDC sales, while BDC operators must render daily returns to authorised dealer banks. Funds purchased by BDC operators are restricted to eligible transactions, with disbursements not exceeding US$5,000 quarterly. All authorised dealers and BDC operators must comply with AML laws and KYC requirements; non-compliance may result in suspension of dealership licences.
Facilitation of seamless use of foreign cards
On 18 December 2025, the CBN issued a circular on the seamless use of foreign cards, requiring all ATMs, points of sale and virtual terminals to: (1) accept all international cards; (2) comply with card association standards; and (3) hold appropriate certifications. Multi-factor authentication is required for withdrawals and online transactions exceeding US$200, US$500, and US$1,000 per day week, and month, respectively.13
Banks and other financial institutions are mandated to implement transaction monitoring, strengthen KYC and AML controls, report suspicious transactions to the NFIU, recalibrate fraud-monitoring systems to minimise false declines on legitimate foreign card transactions and resolve related consumer complaints.
Acquirers must require, verify and retain documentation for card transactions for a minimum of 12 months, retrievable within 24 hours of request. Tourists or Nigerian returnees experiencing difficulty with foreign-issued payment cards may address complaints to the CBN Consumer Protection Department.
Removal of cash pooling requirement for IOCs
By March 2026, having achieved sufficient FX market stability through the stabilisation measures described above, the CBN pivoted towards liberalisation. By a circular dated 25 March 2026 titled ‘Removal of Cash Pooling Requirement for International Oil Companies (IOCs)’14 (the 2026 Cash Pooling Circular), the CBN removed the mandatory cash pooling requirement previously applicable to IOCs operating in Nigeria. Under the prior framework established by CBN circulars in 2024, authorised dealer banks (ADBs) were permitted to pool a maximum of 50% of IOCs’ repatriated export proceeds immediately, with the remaining 50% required to be retained in Nigeria for 90 days before repatriation. That retention requirement was imposed at a time of acute FX scarcity to rebuild reserves and stabilise the naira. With those objectives substantially achieved, the 2026 Cash Pooling Circular removes these restrictions with immediate effect, granting IOCs unfettered access to repatriate 100% of their export proceeds through ADBs, and supersedes all previous CBN circulars on cash pooling. ADBs must ensure proper documentation of all such transactions and submit monthly reports to the Director of the Trade and Exchange Department of the CBN. The removal signals improved confidence in Nigeria's FX market, affords IOCs greater operational flexibility and is intended to encourage greater capital participation in the Nigerian economy.
Circular on advertisement compliance
On 27 November 2025, the CBN issued a circular titled 'Letter to All Banks, Payment Service Banks and Other Financial Institutions (as defined under BOFIA, 2020): Compliance with Regulatory Provisions on Advertisement and Immediate Withdrawal of Non-Compliant Advertisements'. Its purpose is clarifying advertisement requirements for banks and other financial institutions, requiring all advertisements to be transparent, prohibiting promotions constituting inducement and specifying that notifications to the CBN must include the duration, material and target audience.15 Non-compliant advertisements must be withdrawn with immediate effect.
The Revised Cash-Related Policies
As part of the CBN’s efforts to moderate cash management and reduce money laundering risks, the CBN issued the Revised Cash-Related Policies (the Cash Policies)16 on 2 December 2025, seeking to reduce cash usage and encourage adoption of alternative payment options.
The Cash Policies took effect on 1 January 2026 and apply to all banks and other financial institutions. They introduced tightened cash withdrawal limits to curtail heavy cash reliance and reduce associated money laundering risks. Weekly cash withdrawal limits are set at 500,000 naira for individuals and 5 million naira for corporates, with excess withdrawal fees of 3% and 5% respectively. ATM withdrawals are capped at 100,000 naira per card daily, subject to a weekly 500,000 naira limit. The limits do not apply to foreign currency. Banks must report to the CBN on transactions exceeding prescribed limits. Government account transactions are exempt.
The prior special authorisation for the withdrawal of 5 million naira and 10 million naira by individuals and corporates, respectively, no longer applies. Fees on excess withdrawals are shared between the CBN and the relevant financial institution at a ratio of 40% and 60%, respectively.
Guidelines for the Operations of Agent Banking in Nigeria
Agent banking in Nigeria was first formally introduced by the CBN in 2013 through the regulatory framework for the use of financial agents in Nigeria, with the objective of deepening financial inclusion by extending basic banking services to underserved and unbanked populations through third party agents such as retail outlets, pharmacies and cooperatives. By 2024, Nigeria's agent banking network had grown to over 2 million registered agents processing hundreds of millions of transactions annually, serving as a critical channel for last-mile financial services delivery in rural and peri-urban communities. Notwithstanding this growth, the original framework had become strained by operational inconsistencies, compliance gaps and the emergence of new market participants such as super agents and payment terminal service aggregators (PTSAs), necessitating a more comprehensive regulatory architecture.
On 6 October 2025,17 the CBN issued guidelines for agent banking operations, establishing minimum standards for the sector. Stakeholders under the guidelines include principals,18 super agents,19 agents,20 PTSAs, the CBN and any other CBN-approved participant.
In a direct relationship, an agent is exclusive to one principal, and in indirect relationships, the agent can only belong to one network of one super agent. Agents may be individual or non-individual, and must demonstrate the ability to carry out the permissible activities,21 provide mandatory information, obtain relevant authorisation and not be less than 18 years of age.
The guidelines mandate an agent banking agreement between a principal and an agent, which will provide for the duration, authorised services, applicable fees, remuneration, parties’ obligations, dispute resolution, amendment and termination. Principals and agents must also comply with Anti-Money Laundering/Combating the Financing of Terrorism and Counter Proliferation Financing (AML/CFT/CPF) requirements, and principals are responsible for ensuring the cash transaction limits under the guidelines are adhered to and that each agent’s daily cumulative cash-out limit does not exceed 1.2 million naira. Failure to comply may result in administrative penalties or the prohibition of defaulting institutions or persons from conducting agent banking business.
Nigerian Overnight Financing Rate (NOFR)
The CBN, in collaboration with the Financial Markets Dealers Association (FMDA), launched the Nigerian Overnight Financing Rate (NOFR) on 17 April 2026.22 NOFR is a transaction-based benchmark interest rate reflecting the cost of secured overnight funds exchanged between banks, designed to enhance transparency, improve price discovery, strengthen monetary policy transmission and deepen Nigeria's money market. The groundwork for NOFR was laid at a stakeholder engagement session on 27 February 2026, at which market participants formally endorsed the framework. Nigeria thereby joins economies that rely on modern overnight benchmark rates, including SOFR (United States), SONIA (United Kingdom), €STR (eurozone), TONA (Japan), and JIBAR (South Africa). The CBN, as benchmark administrator, will govern and publish the rate. NOFR is expected to foster consistent pricing of money market instruments, support financial innovation, boost investor confidence and strengthen risk management across the Nigerian financial system.
It is important to distinguish NOFR from the Monetary Policy Rate (MPR), the CBN's benchmark interest rate used for monetary policy signalling and historically the reference rate for pricing commercial credit facilities, floating-rate instruments, and other financial contracts in Nigeria. The MPR is set by the CBN's Monetary Policy Committee (MPC) and reflects the rate at which the CBN lends to commercial banks overnight; it is an administered, policy-driven rate. By contrast, NOFR is derived from actual secured overnight funding transactions between banks, making it a market-determined rate rather than a policy signal. The MPR has been widely embedded in loan agreements and bond documentation as a contractual benchmark – typically expressed as ‘MPR plus a margin’, owing to its simplicity and the absence of a robust market-derived alternative. NOFR is intended to fill that gap and is expected over time to progressively supplement, and potentially displace, the MPR as the preferred contractual reference rate in Nigeria, particularly for money market and interbank transactions, bringing Nigerian market practice in line with jurisdictions that have transitioned to risk-free, transaction-based overnight rates.
Anti-money laundering requirements
In 2025, the CBN, in a bid to improve compliance with KYC requirements and combat money laundering, financing of terrorism and other illicit financial activities, rolled out several policies.
Documentation requirements for PAPSS transactions in Nigeria
On 28 April 2025, the CBN issued the circular titled 'Review of Documentation Requirements for PAPSS Transactions in Nigeria', which provides the documentation requirements for Pan-African Payment and Settlement System (PAPSS) transactions in Nigeria.23 This circular supersedes the ‘Review of Documentation Requirements for PAPSS Transactions’ issued in 2024. A major inclusion is that banks that are authorised FX dealers are now allowed to use basic documentation (ie, KYC and AML/CFT/CPF) provided by customers for individual transactions below US$2,000 and corporate transactions below US$5,000. However, for transactions exceeding the above thresholds, the documentation requirements applicable under the Foreign Exchange Manual continue to apply.
The circular equally allows authorised dealers to source FX to settle PAPSS transactions through the NFEM without recourse to the CBN.
Bureaux de change operators and AML/CFT/CPF compliance
On 17 April 2025, CBN issued a letter to BDC operators titled 'Letter to Licensed Bureau de Change Operators in Nigeria on Compliance with Anti-Money Laundering/Combating the Financing of Terrorism and Counter Proliferation Financing (AML/CFT/CPF) Regulations',24 informing these institutions that mystery shopping exercises would be carried out. Mystery shopping according to the letter would involve deployment of anonymous compliance testers to assess the practical implementation of AML/CFT/CPT obligations.
The letter equally serves as a reminder to BDC operators to comply with the provisions of the Money Laundering (Prevention and Prohibition) Act, 2022, the Terrorism (Prevention and Prohibition) Act, 2022, and other relevant laws and regulations, with which BDC operators are required to demonstrate full compliance. The objective of this letter is for BDC operators to be aware that where lapses are identified, these institutions face the risk of monetary penalties and possible revocation of their operating licences. BDC operators are also encouraged to ensure compliance with applicable requirements.
Sanctions compliance obligations on banks, payment service banks and other financial institutions
In a letter dated 17 April 2025 and titled 'Letter to Banks, Payment Service Banks and Other Financial Institutions Reminder on Sanctions Compliance Obligations', the CBN reminded banks and other financial institutions of their obligations to comply with applicable United Nations and Nigerian sanctions regimes.25 The CBN requires banks and other financial institutions to identify changes across applicable sanctions list, conduct real-time screening of customers and file appropriate reports with the NFIU and notify the CBN where necessary. Failure to comply will result in enforcement action or regulatory sanctions.
Establishment of compliance departments and reassignment of non-prudential supervisory responsibilities
The CBN issued a letter on 4 September 2025 to financial institutions titled 'Letter to banks, payment service banks and other financial institutions on establishment of the compliance department and reassignment of non-prudential supervisory responsibilities', informing them of the need to establish compliance departments in the first quarter of 2025.26 The new department is responsible for: (1) financial crime supervision including AML/CFT/CPT and sanctions compliance; (2) market conduct supervision including disclosure practices, complaints management frameworks and advertising standards; (3) enterprise security supervision, which includes cybersecurity and data protection; and (4) corporate governance and ESG supervision.
The aim of the letter is to inform financial institutions to direct all matters and inquiries regarding these matters to the compliance department.
Standards for automated anti-money laundering solutions
On 10 March 2026, the CBN issued the final Baseline Standards for Automated Anti-Money Laundering Solutions for Financial Institutions in Nigeria (the Baseline Standards), with the primary objective of strengthening AML/CFT/CPF capabilities through technology. Other objectives include encouraging the adoption of emerging technologies and supporting compliance with domestic and international regulatory expectations.
The Baseline Standards apply to all financial institutions, including deposit money banks, microfinance banks, primary mortgage banks, digital payment service providers and other financial institutions. The Baseline Standards cover system functionality, transaction monitoring, customer due diligence and KYC processes, sanctions screening, regulatory reporting and case management; data security and protection, vendor management and risk assessment.
The CBN issued a guidance note27 on 31 March 2026 to assist financial institutions with the implementation of the Baseline Standards. DMBs must achieve full compliance by 10 September 2027, other financial institutions by 10 March 2028, and all institutions must submit implementation roadmaps to the CBN's Compliance Department by 10 June 2026.
Corporate governance and oversight regulation of Nigerian banks
Across 2025, the CBN, pursuant to its powers under the BOFIA 2020 took the following steps in respect of the corporate governance of banks and other financial institutions to ensure transparency and operational efficiency in the sector.
D-SIBs: appointment and announcement of successors to managing director
On 16 September 2025, the CBN issued a circular titled 'Circular to all Domestic Systemically Important Banks (D-SIBs): Appointment and Announcement of Successors to Managing Director pursuant to section 2.14 of the CBN Corporate Governance Guidelines reiterating to D-SIBs the importance of effective succession planning. D-SIBs must obtain regulatory approval for the appointment of a successor MD/CEO no later than six months before the expiration of the incumbent's tenor and must publicly announce the successor at least three months before the incumbent's planned exit.
Automatic revocation of BDC licences for failure to meet requirements
In December 2025, the CBN announced the automatic revocation of licences of all legacy BDC operators who failed to meet the new licensing requirements by 30 November 2025.28 This measure formed part of the CBN’s broader effort to consolidate and formalise the BDC sector, ensuring that only adequately capitalised and compliant operators participate in the retail FX market.
Requirement to publish information on dormant accounts online
In a circular issued on 17 February 202529 pursuant to its guidelines on management of dormant accounts, unclaimed assets and other financial assets, the CBN mandated banks and other financial institutions to publish information on dormant accounts on their websites, including the account name, account type, bank name, and branch. This information must also be published annually in at least two national daily newspapers.
The regulatory regime applicable to banks
BOFIA 2020 is the principal legislation setting out the regulatory framework for banking activities in Nigeria.30 It provides for the regulatory powers of the CBN over Nigerian banks.
The CBN restricts banking business to commercial, merchant and specialised banks, whose activities are confined to core banking business. Except as expressly permitted under BOFIA 2020, a licensed bank cannot hold direct or indirect interests in enterprises conducting non-core banking activities such as capital markets, pension administration or insurance. Promoters wishing to offer these services typically adopt a non-operating financial holding company structure, with non-core activities conducted through other subsidiaries.
Foreign financial institutions
Foreign financial institutions may provide offshore credit facilities to Nigerian entities on a ‘reach in’ basis without the need to obtain a banking licence from the CBN. However, where a foreign bank wishes to establish physical presence and provide credit facilities in Nigeria, the bank will be required to incorporate a company in Nigeria and obtain a banking licence.31 BOFIA 2020 also empowers the CBN to grant a licence to foreign banks to undertake domestic or offshore banking business within a designated free trade or special economic zone in Nigeria.32 Foreign banks may also apply to the CBN for a licence to open and operate a representative office (typically licensed to only meet with potential clients, and to conduct research activities) in Nigeria.33
Conversely, any Nigerian bank wishing to open an offshore subsidiary must, inter alia, have been in sound financial condition (in terms of liquidity and capital adequacy) for at least the previous 12 months, and must have operated profitably for the previous two years, as reflected in the audited financial statements of the applying bank.34
Reporting requirements
The Nigeria Tax Administration Act 2025 (NTA) repositions banks as key enforcement and collection agents within the tax administration framework. Section 8(2) of the NTA requires banks and financial institutions to make Tax ID a precondition for opening or operating any account, and to prepare and submit quarterly returns to the relevant tax authority (the Nigeria Revenue Service (NRS)) with or without demand, on certain categories of customers. These returns must include details (names and addresses) of new customers and existing customers whose cumulative transactions in a calendar month meet or exceed the statutory thresholds of 25 million naira and 100 million naira cumulative monthly transactions for individuals and corporate entities, respectively.
Foreign exchange market
Authorised Dealer Banks are required to render timely and accurate reports of all foreign exchange transactions via the CBN Forex Blotter reporting system through application programming interface (API) calls and recording by close of business on the transaction date.35 Non-compliance may attract suspension from the foreign exchange market. The Electronic Foreign Exchange Matching System (EFEMS),36 operational on the Bloomberg BMatch platform from 2 December 2024, has reduced speculative activities, eliminated market distortions and afforded the CBN enhanced oversight capabilities over the Nigerian FX market.
Cybersecurity
Given the increasing digitalisation of banking services, cybersecurity compliance remains a critical ongoing obligation for Nigerian banks. The Cybercrimes (Prohibition, Prevention, etc.) (Amendment) Act 2024 (the Act), enacted on 28 February 2024, requires banks to obtain customers' National Identification Numbers (NINs), in addition to other valid documents, before issuing credit cards, debit cards and related electronic devices. Banks must incorporate the minimum standards in the Risk-Based Cybersecurity Framework and Guidelines for Deposit Money Banks and Payment Service Banks 2024 into their cybersecurity programmes, including cybersecurity governance and oversight responsibilities for the board, senior management and the chief information security officer. Additionally, the Act originally introduced a 0.5% national cybersecurity levy on eligible electronic transactions to be remitted to the National Cybersecurity Fund;37 however, following CBN implementation guidance38 issued on 6 May 2024, enforcement was suspended on 17 May 2024 pending further review. Stakeholders should verify the current status of the levy before proceeding with any collections.
Other than the CBN, the following statutory bodies also exercise regulatory oversight on Nigerian banks:
the Nigeria Deposit Insurance Corporation (NDIC);39
the Corporate Affairs Commission (CAC);40
the Financial Reporting Council of Nigeria (FRCN);41
Nigeria Revenue Service;
the Securities and Exchange Commission (SEC);42 and
the Nigerian Exchange Limited (NGX), which regulates companies (including banks) that are listed on the NGX.
Prudential regulation
Relationship with the prudential regulator
In Nigeria, licensing, prudential regulation and consumer protection are all primarily performed by the CBN. The 2011 CBN Supervisory Intervention Framework for the Nigerian Banking Sector complements the CBN’s 2010 Prudential Guidelines for Deposit Money Banks (DMBs) in Nigeria. Both underscore the adoption of a risk-based supervisory approach. The CBN’s website sets out all the prudential guidance notes currently in force, characterised by the license type of each financial institution.43 DMBs are required to comply with Basel III Guidelines/Reporting Templates released by the CBN.44
Adequacy assessment
The CBN mandates45 all banks licensed to carry out banking business in Nigeria to submit monthly Basel III compliance reports no later than five working days after the end of the preceding month.46 Failure to comply with this obligation puts a bank at risk of having its banking licence revoked.47 Furthermore, the CBN’s Framework for the Regulation and Supervision of Domestic Systemically Important Banks 2014 (the D-SIB Framework) mandates that banks classified as Domestic Systemically Important Banks (D-SIBs) maintain a minimum capital ratio of 15% (CAR)48 and set aside an additional surcharge of 1% of their respective minimum required CAR.49 All other DMBs that are not D-SIBs must maintain a minimum of 10% of the total risk-weighted assets as capital funds on an ongoing basis. For a holding company group, its minimum capital adequacy ratio shall not be less than the capital ratio requirement of any banking subsidiary within the group. In this regard, the reference subsidiary shall be that with the highest minimum capital requirement. The CBN may require higher levels of minimum capital after taking into consideration the results of the Supervisory Review Process of Internal Capital Adequacy Assessment Process (SRP/ICAAP).
A non-compliant D-SIB is liable to a fine of not less than 5 million naira and an additional 200,000 naira for each day the failure persists.50 The CBN may also dissolve a bank’s board and management for non-compliance, and where a DMB's financial position becomes precarious, the NDIC may, after consulting the CBN, take over management51 and create a bridge bank.52 Further details are set out below.
Temporary capital conservation measures for forbearance banks
In June 2025, the CBN introduced temporary capital conservation measures for banks operating under credit or Single Obligor Limit forbearance, so that affected institutions would strengthen their balance sheet resilience53 during the transitional supervisory period. The directive suspends dividend payments, executive bonuses, and investments in foreign subsidiaries until affected banks fully comply with capital adequacy and provisioning requirements, thereby ensuring capital retention until the banks achieve full regulatory compliance.
Regulatory capital and liquidity
The prudential standards applicable to regulatory capital and liquidity for Nigerian banks are modelled on Basel III Guidelines and can be found on the CBN’s website in the following guidelines (along with their reporting templates and guidance notes):
the Guidelines on Regulatory Capital for Group Capital Adequacy and Solo Capital Adequacy (Revised Regulatory Capital Guidelines);54
the Guidelines on Leverage Ratio;55
the Guidelines on Liquidity Monitoring Tools;56
the Guidelines on Large Exposures;57
the Guidelines on Liquidity Risk Management and Internal Liquidity Adequacy Assessment Process;58 and
the Revised Guidelines on the SRP/ICAAP.59
Regulatory capital and liquidity
The CBN has identified areas of national discretion or deviation from Basel III Guidelines, some of which include:
permitting banks in Nigeria to employ short-term subordinated debt as a third tier of capital;
lowering risk weight to claims on and claims guaranteed by sovereigns or central banks in domestic currency if funded in that currency;
giving preferential treatment of claims to banking institutions with maturity of three months or less; and
imposing criteria for non-internationally active banks using a standardised approach.60
Consolidated supervision
The CBN mandates banks to report on capital adequacy on both a stand-alone and consolidated basis, monthly and quarterly. Stand-alone capital adequacy encompasses a bank’s global operations, including foreign subsidiaries and overseas branches; investments in capital instruments of subsidiaries that are consolidated in group financial statements are deducted from the corresponding capital instruments issued.
Liquidity
The CBN sets out the minimum liquidity ratio benchmarks for the banking sector. While the CBN published the Monetary, Credit, Foreign Trade and Exchange Policy Guidelines for fiscal years 2024/2025 (the MCFT Policy Guidelines) on 17 September 2024, those guidelines were temporarily suspended on 20 September 2024. The CBN has continued to communicate applicable liquidity requirements through its Monetary Policy Communiques, most recently maintaining the liquidity ratio at 30% in Monetary Policy Communique No. 161 published on 24 February 2026. Under the current applicable requirements, the CBN requires that banks maintain minimum liquidity ratios as follows:
DMBs: 30%;
merchant banks: 20%; and
non-interest banks: 10%.
Standardisation of credit reporting and loan classification
Further, the CBN has introduced additional standardisation requirements for credit information assessment,61 addressing inconsistencies between credit printout information and actual customer file data. The rules mandate uniform loan identification and life cycle reporting, which entails fixed contract numbers, unchanged origination dates, documented restructurings and proof of repayment for removed facilities. The rules also introduce portfolio discipline by limiting ‘yearly’ and ‘bullet’ repayments to 10% of total loans, with a prohibition on bullet repayments for project-based facilities.
Minimum capital requirements
The CBN requires banks to hold total regulatory capital amounting to Tier 1 and Tier 2 Capital net of regulatory adjustments, measured against risk-weighted assets. The CBN has released specific guidance notes on the calculation of capital requirements for credit, market and operational risks. The CBN temporarily suspended the regulatory caps on the recognition of Additional Tier 1 (AT1) capital in capital adequacy ratio calculations until March 2026 to ensure a smooth transition, a suspension that has now lapsed following the conclusion of the recapitalisation programme. Capital adequacy ratios across the sector are now maintained above international Basel benchmarks, with minimum CAR thresholds of 10% for regional and national banks and 15% for banks with international authorisation. The CBN’s mandated recapitalisation is discussed under ‘Year in review’, above.
Foreign exchange trading automation
In line with its modernisation agenda, the CBN has encouraged banks to adopt automated FX trading platforms62 to enhance transparency, reduce operational risks and improve liquidity management. Banks are required to integrate these platforms with their internal systems for regulatory reporting and real-time monitoring of FX positions.
Foreign currency-denominated collateral
The CBN’s stance on foreign-currency denominated collateral has been extensively discussed under ‘Year in review’, above.
Conduct of business
In addition to BOFIA 2020, banks must navigate an expanded regulatory landscape that prioritises capital adequacy, anti-money laundering vigilance and digital transparency. Key regulatory frameworks include:
the Companies and Allied Matters Act, 2020 (as amended) (CAMA 2020);
the NDIC Act, 2023;
the Foreign Exchange (Monitoring and Miscellaneous) Act Cap F34 LFN 2004;63
the Financial Reporting Council of Nigeria (Amendment) Act 2023;
the CBN Anti-Money Laundering, Combating the Financing of Terrorism and Countering Proliferation Financing Regulations;
the CBN Customer Due Diligence Regulations;
the CBN Corporate Governance Guidelines;
the Code of Conduct in the Nigerian Banking Industry;
the Money Laundering (Prevention and Prohibition) Act, 2022;
the Terrorism (Prevention and Prohibition) Act, 2022
the Nigeria Data Protection Act, 2023 (NDPA);
the Nigeria Data Protection Regulation 2019; and
supervision circulars and guidelines released from time to time by the CBN.
As discussed under ‘Year in review’, 33 banks met the revised capital requirements by the 31 March 2026 deadline, with a limited number of institutions remaining subject to ongoing processes.64
The CBN introduced clear compliance parameters and a more structured, transparent approach to agent banking in Nigeria. The Guidelines now precisely define the scope of agent activities, introduce exclusivity requirements between agents and principals and establish a comprehensive framework for agent appointments.
To promote consistency and market integrity, the CBN issued a directive for the immediate withdrawal of non-compliant bank advertisements, with further sanctions from January 2026 for materials that are not factual, balanced and transparent.65
Funding
Nigerian banks primarily raise funds from customer deposits, supplemented by capital market issuances – including bonds and other financial instruments, which were particularly significant during the recapitalisation programme ahead of the 31 March 2026 deadline. Banks also access loans from development finance institutions, foreign institutional lenders and international banks, on-lending the proceeds to customers. Additional funding sources include trading in securities (particularly treasury bills and government-backed securities), short-term interbank lending, interest on loans and fees from banking services.
The CBN is empowered under the CBN Act to lend to Nigerian banks facing liquidity issues on terms and interest rates it deems fit. The MCFT Guidelines outline specific liquidity provisions and ratios for financial institutions, subject to subsequent variations communicated via CBN circulars and communiques. The MCFT Guidelines published on 17 September 2024 were temporarily suspended on 20 September 2024.66 However, the CBN has since maintained the liquidity ratio at 30% through its Monetary Policy Communiques, most recently in Communique No. 161 (24 February 2026).67
Control of banks and transfers of banking business
Control regime
For the change of control regime of banks, see above. CAMA 2020 imposes disclosure and notification requirements applicable to private and public companies: every person with significant control over, or who is a substantial shareholder in, a Nigerian company (including a bank) must disclose that control or shareholding to the company. Pursuant to CAMA 2020, the CAC issued the Persons with Significant Control (PSC) Regulations 2022, requiring companies to file a notice of particulars of PSCs at the CAC before it can file its annual returns at the CAC.68
The CBN CG Guidelines further provide that no director, shareholder or agent of a financial holding company (FHC) shall, without the CBN’s prior written approval, enter into any agreement resulting in a change of control of the FHC, or a transfer or acquisition of shareholding of 5% or more in the FHC. CBN prior approval must also be obtained before any acquisition of FHC shares through the capital market that would result in equity holding of 5% or above. Subsidiaries of an FHC are prohibited from acquiring shares in their FHC or in other subsidiaries within the group.69
Transfers of banking business
Although BOFIA 2020 provides that the business combination provisions of the FCCPA (sections 92(1), (2) and (3), 94 and 98) apply to business combinations involving banks or other financial institutions, section 65(3) provides that references to the FCCPC shall be construed as references to the CBN. BOFIA 2020 further provides that the FCCPA shall not apply to any function, act, financial product, financial service and transaction by a bank or other financial institution licensed by the CBN. Following the announcement of the recapitalisation programme in 2024 and the 31 March 2026 compliance deadline, the banking sector recorded significant merger activity in 2025. On 1 September 2025, Union Bank of Nigeria completed its merger with Titan Trust Bank Limited following final CBN approval, fully absorbing Titan Trust Bank's operations and assets,70 and now operates under the Union Bank brand with over 293 service centres and 937 ATMs nationwide. Additionally, on 26 September 2025, shareholders of Unity Bank Plc approved its proposed merger with Providus Bank71 with the CBN approving a twenty-year loan of 700 billion naira to facilitate settlement of Unity Bank's obligations and enhance the recapitalisation of the new entity whose new name is yet to be announced.
The Nigerian banking sector recapitalisation programme has been successfully concluded as discussed under ‘Year in review’. Further consolidation activity is anticipated as the limited number of institutions subject to ongoing processes resolve their regulatory positions.
Business combinations involving banks that are public companies also fall within the regulatory purview of the SEC.72 Sections 142 to 148 of the Investments and Securities Act 2025 and the Amendment to the Rules on Mergers, Take-Overs and Acquisitions issued in August 2021 govern any proposed takeover bid for a Nigerian bank that is a public company. The SEC has also released an external memorandum detailing capital raising options, documentation requirements, information checklists, indicative timelines and applicable fees to assist banks in complying with the recapitalisation programme. Where a bank is publicly quoted on the NGX, the Rulebook of the Exchange 2015 requires that the NGX's consent to the merger also be obtained.
Outlook and conclusions
In 2025, the CBN implemented regulatory reforms aimed at strengthening the resilience and integrity of the financial system, with a clear emphasis on evidence-based monetary policy, reduced fiscal intervention, enhanced oversight of deposit money banks, inflation moderation and sustained FX market stabilisation.73
These reforms have yielded measurable positive outcomes, including maintenance of policy rates within targeted corridors, improved FX market stability, upgrades to Nigeria’s sovereign credit ratings and Nigeria’s removal from the Financial Action Task Force (FATF) grey list.74 Collectively, these developments have strengthened investor confidence and reinforced the credibility of Nigeria’s financial system.
Looking ahead, the CBN is expected to deepen interventions promoting a sound banking system, durable price stability, expanded financial inclusion and fintech-led innovation. With the recapitalisation programme concluded as of 31 March 2026, banks are expected to focus on integrating merged operations, optimising strengthened capital bases, and pursuing sustainable growth. Capital market operators continue to pursue compliance ahead of the 30 June 2027 deadline.
In addition, regulators are also expected to harness artificial intelligence to enhance supervisory effectiveness and strengthen early warning systems. The CBN is expected to sustain targeted interventions to moderate inflationary pressures and stabilise the naira, supporting a more predictable operating environment for banks and financial market participants in 2026.
This was originally published by Lexology [Read the full publication here]
