By Hosea Parah, Abuja

The Central Bank of Nigeria (CBN) has issued a directive temporarily suspending the payment of dividends, bonuses, and foreign investments for banks currently operating under regulatory forbearance. The move is part of the apex bank’s ongoing strategy to reinforce the resilience and stability of the Nigerian banking sector amid ongoing capital adequacy reviews.

In a circular recently signed by Dr. Olubukola A. Akinwunmi, Director of Banking Supervision, the CBN mandated that affected banks:

Suspend dividend payments to shareholders,
Defer bonuses to directors and senior management staff, and
Halt investments in foreign subsidiaries and offshore ventures.
The directive applies specifically to banks that are currently benefitting from forbearance related to credit exposures and Single Obligor Limits (SOL). Regulatory forbearance is a temporary relaxation of banking rules to allow financial institutions to recover from stress conditions.

“This supervisory measure is intended to ensure that internal resources are retained to meet existing and future obligations and to support the orderly restoration of sound prudential positions,” the CBN stated.

The central bank emphasized that the suspension will remain in place until the affected banks have fully exited their forbearance status and have demonstrated compliance with capital adequacy and provisioning standards through independent verification.

The CBN also assured that it will continue to monitor the situation closely and engage with affected financial institutions as needed to ensure stability and compliance.

This move is expected to impact investor sentiment in the short term but is seen by analysts as a necessary step to shore up the long-term health of the sector, especially amidst lingering concerns about non-performing loans and risk concentration.

Banks not under regulatory forbearance are not affected by this directive.