CBN Mandates Capital Restoration Plans for Banks: A Step Towards Regulatory Compliance

The Central Bank of Nigeria has instructed banks to provide a capital restoration plan as part of its regulatory measures aimed at facilitating the exit from the forbearance system. 

According to a circular issued on Monday and signed by Olubukola Akinwunmi, the CBN's Director of Banking Supervision, the Capital Restoration Plan will work alongside other steps, which include ending forbearance exposure, waiving Single Obligor Limits, suspending dividend and bonus payments, and halting investments in foreign subsidiaries for the banks involved.

The CBN stated that all affected banks must develop and submit a detailed Capital Restoration Plan by the 10th working day after the end of each quarter, starting from June 30, 2025.

The plan should outline management's strategies for achieving full regulatory compliance, incorporating initiatives for cost optimization, risk asset reduction, significant risk transfers, and necessary adjustments to business models.

The plan must encompass the duration required to fully normalize capital and asset quality indicators.

Furthermore, plans submitted will undergo regulatory review and approval and will serve as the foundation for ongoing supervisory monitoring and engagement during the transition.

The CBN also mandated that lenders provide quarterly disclosures on essential metrics to promote regulatory transparency and enhance supervisory oversight.

Beginning June 30, 2025, banks are required to disclose “detailed provisioning status and reconciliation of affected credit exposures, CAR calculations with and without transitional reliefs, classification migration data for restructured or affected loan facilities, and comprehensive disclosure of AT1 instruments, including terms of issuance, usage, and related conditions.”

The Central Bank emphasized that these measures establish a solid yet supportive framework for the final phase of exiting the regulatory forbearance regime and demonstrate the CBN’s strong focus on macro-financial stability, responsible banking practices, and standards.