Expert links CBN’s latest directives on capital, forbearance to basel III requirements

Renowned financial analyst and CEO of CFG Advisory, Mr. Tilewa Adebajo, has linked the Central Bank of Nigeria’s (CBN) latest circulars on capital requirements and the withdrawal of forbearance measures to the global implementation of Basel III banking standards.

These measures, he said, were part of a broader effort to strengthen the resilience and stability of Nigeria’s financial system.

Speaking during a live interview monitored on TVC in Lagos, Adebajo explained that banking today operates in a globalized environment where regulatory frameworks are periodically revised. “The world is moving into Basel III and IV frameworks,” he said, emphasizing that these reforms focus heavily on risk-weighted capital adequacy and stricter regulatory compliance.

According to him, the CBN’s current directives are a reflection of this international shift. He noted that the apex bank has launched an organized recapitalization program for Nigerian banks, many of which have already embarked on their first phase of capital raising. “Each bank is adopting its own strategy. This is an ongoing process,” he stated.

He also explained the rationale behind the recent withdrawal of COVID-era forbearance measures. During the pandemic, banks worldwide were granted temporary relief to cushion the economic impact, particularly concerning single obligor limits—rules that restrict how much a bank can lend to a single borrower based on its capital base. “Some banks exceeded those limits under the forbearance window. But now, with the pandemic over and the sector recapitalizing, the CBN is returning to standard regulatory practices,” he said.

Another key directive, Adebajo noted, is the temporary lifting of additional Tier 1 capital recognition limits. Banks now have until March 31, 2026, to fully align their capital adequacy ratios, giving them more time to normalize their books.

He added that other measures—such as restrictions on dividend payouts and bonuses, as well as heightened regulatory disclosure requirements—are all part of a structured approach to reform. “There’s no cause for panic,” Adebajo reassured. “This is a disciplined process, and once the recapitalisation is complete, many of the legacy issues will be resolved.”

In essence, Adebajo views the CBN’s moves not as reactionary, but as strategic alignments with global banking standards aimed at future-proofing Nigeria’s financial sector.

READ ALSO: Nigeria’s money supply dropped to N118.99trn in May — CBN