CBN's new bank holding rules may force restructuring, raise capital needs for Nigerian banks
CBN released an exposure draft last week proposing sweeping Financial Holding Company regulations based partly on Chapel Hill Denham's white paper. The draft requires HoldCos to maintain a 20% capital buffer above combined subsidiary share capital and mandates that Nigerian banks with foreign subsidiaries relinquish direct ownership—offshore holdings must now be held by the HoldCo itself or an intermediate HoldCo, with a maximum of two hierarchies permitted for international operations.
This matters because it directly impacts how major Nigerian banks like Access Bank (whose subsidiary owns other African banks) structure their regional operations. Under current rules, Nigerian banks must hold ₦500 billion to qualify for an international banking licence, while foreign banks operating in Nigeria need only ₦200 billion in capital. Chapel Hill argues this forces Nigerian banks to hold excess capital, depressing returns and contributing to stock valuation discounts. Bankers warn the new capital buffer could further strain ROE and that restructuring offshore subsidiaries would be costly and operationally complex.
Stakeholders have until July 9 to submit comments. Key debates center on whether the international banking licence remains necessary at the bank level if foreign subsidiaries move to the HoldCo, and whether the 51% ownership threshold (vs BOFIA's 50% control rule) creates unnecessary complications. Will banks restructure to comply before the deadline, or push back on rules they say hurt competitiveness?