The Central Bank of Nia fresh directive instruct-ing Deposit Money Banks (DMBs) operating under regulatory forbearance, to suspend dividend pay-ments, defer bonuses for executives, and also stop investments in foreign subsidiaries or offshore ventures, according to a Nairametrics report.

The report said that the temporary suspension was part of the apex bank’s strategy to bolster capital buffers, improve balance sheet resilience, and ensure prudent capital retention within the banking sector.

According to the report, the directive applies spe-cifically to banks currently benefitting from forbear-ance in relation to credit exposures and Single Ob-ligor Limit (SOL) breaches, conditions that suggest po-tential stress in the affected institutions.

The suspension, the re-port said, would remain until the CBN is able to independently verify the capital adequacy of the banks.

It quoted the apex bank as saying that: “This tem-porary suspension is until such a time as the regula-tory forbearance is fully ex-ited and the banks’ capital adequacy and provision-ing levels are indepen-dently verified to be fully compliant with prevailing standards. This supervi-sory 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 posi-tions.”

Interestingly, the new di-rective is coming against the backdrop of efforts by lend-ers to comply with new capital requirements which the CBN introduced in 2024.

Analysts note that in April 2022, the CBN ex-tended interest rate for-bearance on loans by an additional year, a move which was designed to ease pressure on borrow-ers during COVID-19 recovery, but it also left banks exposed to height-ened credit risks without immediately recognising potential losses.

In September 2023, the CBN issued a circular in which it prohibited banks from using gains from FX revaluation for dividends or other capital expendi-tures and directed that such revaluation profits should be warehoused in a “Special Regulatory Re-serve” until further notice.

Furthermore, in March 2024, the CBN warned banks against paying div-idends with FX gains. It advised banks to retain the funds to boost their capi-tal positions and to absorb shocks from the unification of the country’s multiple exchange rates.