In a fresh wave of regulatory tightening aimed at strengthening Nigeria’s financial system, Renaissance Capital Africa has disclosed that six Nigerian banks are currently holding over $3.5 billion in delayed or forbearance loans, triggering the Central Bank of Nigeria’s (CBN) latest clampdown on capital risk management.
The investment banking firm’s recent report titled “Nigerian Banks: Cash is King” painted a cautionary picture of mounting forbearance exposures—temporary relief extended by the CBN to allow banks delay recognising loan losses or restructuring non-performing loans (NPLs). These exposures, according to the report, could have far-reaching implications for shareholder earnings, capital adequacy, and investment flows into the banking sector.
Among the six affected financial institutions, Zenith Bank tops the list with a staggering $1.6 billion in forbearance loans, followed by First Bank with $887 million, and Access Bank with $304 million. Others include Fidelity Bank ($296 million), FCMB ($134 million), and UBA ($282 million). In contrast, GTCO and Stanbic IBTC were found to have no such exposures based on Renaissance Capital’s data, indicating stronger risk controls and earlier resolution of toxic assets.
These forbearance loans are primarily tied to distressed exposures within Nigeria’s oil and gas sector, especially upstream operations and refinery projects, a sector that has been volatile amid forex challenges and delayed reforms.
In a circular signed by CBN Director of Banking Supervision, Olubukola Akinwunmi, banks currently operating under regulatory forbearance were ordered to:
Suspend dividend payments to shareholders
Defer bonuses to directors and senior staff
Refrain from investing in foreign subsidiaries or offshore projects
The directive comes as the apex bank intensifies its efforts to enhance capital buffers, ensure internal capital retention, and promote long-term banking stability during this transitional period in the sector. The forbearance will only be lifted once each bank’s capital adequacy and loan provisioning levels are independently verified to meet regulatory standards.
The Nigerian Stock Exchange on Monday reacted swiftly, as banking stocks recorded a sharp sell-off, with investors responding to dividend freeze fears. Analysts say while the market dip reflects short-term panic, it also presents an entry point for value-driven investors who foresee a medium-to-long-term rebound once capital positions are stabilised.
According to Renaissance Capital’s report, Zenith Bank, FirstBank, and Access Bank show forbearance exposures of 23%, 14%, and 4% respectively of their gross loan portfolios. Similarly, Fidelity Bank and FCMB hold 10% and 8% of their gross loans in forbearance categories. These figures represent a substantial portion of their loan books, implying greater risk to profitability and shareholder returns.
In a deeper look, FCMB’s largest forbearance loan stands at $68.1 million, still below its Single Obligor Limit (SOL) of $94 million, affirming partial compliance with the CBN’s prudential guidelines.
Meanwhile, GTCO’s prudent approach to provisioning, having written off its exposure last year, places it in a stronger compliance position and enhances investor confidence in its risk management framework.
The CBN’s latest action underscores a broader recalibration of Nigeria’s financial services sector, especially in the wake of recent FX liberalisation, recapitalisation talks, and exposure to global economic shocks. As the regulatory forbearance policy matures, banks may need to improve risk frameworks, deepen corporate governance, and shift toward sustainable lending practices.
Key Takeaways:
Over $3.5 billion in delayed loans pose risk to capital positions of six major Nigerian banks.
Dividend payments suspended as part of CBN’s capital-strengthening policy.
Oil and gas sector remains the core risk zone in forbearance lending.
Market sell-offs may open up strategic entry points for long-term investors.
As Nigeria’s banking industry navigates these uncertain waters, regulators and stakeholders alike must prioritise transparency, accountability, and risk control to prevent systemic instability