The Central Bank of Nigeria (CBN) is reinforcing its regulatory oversight to ensure a resilient and well-regulated financial system. Through enhanced compliance measures, risk management frameworks, and a renewed push for bank recapitalization, the CBN aims to safeguard Nigeria’s banking sector from emerging global risks while strengthening its credibility both locally and internationally.
Strengthening Compliance and Risk Management
Under the leadership of Governor Olayemi Cardoso, the CBN has intensified its commitment to financial stability. As part of its regulatory agenda, the apex bank recently hosted a high-level compliance and Anti-Money Laundering (AML) training workshop in Lagos, in partnership with Citi. The event brought together compliance officers, trade specialists, and correspondent banking teams to address global regulatory trends, financial risks, and best practices for sustaining banking relationships.
Shola Phillips, Special Adviser to the CBN Governor on Compliance, emphasized the importance of a dynamic, risk-based AML framework to protect the financial system. Citi’s Correspondent Banking Group Managing Director, Siobhan Ni Ealaithe, highlighted the need for robust governance structures, emphasizing Know Your Customer (KYC), Know Your Business (KYB), and Know Your Transaction (KYT) protocols to mitigate illicit financial activities.
Stephanie Bailey, Head of EMEA AML Risk Management for Foreign Correspondent Banking, pointed out that over $3 trillion in illicit funds flow through the global financial system annually. She urged Nigerian financial institutions to enhance due diligence processes, adopt technology-driven risk assessments, and ensure transparency in transactions.
Ensuring Ethical Banking Practices
Governor Cardoso reiterated the need for strong ethics and professionalism in banking, stating that the CBN has intensified its surveillance of market activities to root out bad actors. He emphasized that the apex bank enforces strict compliance measures, particularly through the recently introduced FX Global Code, which mandates full adherence to foreign exchange regulations.
Banking Sector Resilience
Despite economic challenges, Cardoso affirmed that Nigeria’s banking sector remains stable, with key indicators reflecting resilience. The non-performing loan ratio remains within the 5% prudential benchmark, indicating strong credit risk management. Additionally, banks maintain a liquidity ratio above the regulatory minimum of 30%, ensuring adequate cash flow to meet customer needs. A recent stress test further confirmed the sector’s financial strength.
To enhance the banking sector’s ability to support economic growth, the CBN initiated a two-year recapitalization plan in 2023, giving banks until 2026 to meet new capital requirements. Cardoso noted that many banks have already raised capital through rights issues and public offerings ahead of schedule. Strengthening capital buffers will enable banks to expand credit access to micro, small, and medium enterprises (MSMEs) and invest in critical economic sectors.
Enhancing Financial Inclusion
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The CBN is also focusing on strengthening Other Financial Institutions (OFIs), particularly Primary Mortgage Banks (PMBs) and Microfinance Banks (MFBs), to boost financial inclusion. Nigeria’s fintech ecosystem has played a crucial role in driving financial access, with several fintech firms achieving unicorn status in recent years. However, Cardoso stressed the need for fintech companies and banks to implement stringent KYC processes to prevent fraud and ensure consumer protection.
Bank Recapitalization and Economic Growth
The ongoing recapitalization of banks is expected to drive economic stability by enabling financial institutions to take on more risk, particularly in underserved markets. Under the plan announced in March 2024, banks must meet minimum capital requirements: ₦500 billion for international banks, ₦200 billion for national banks, and ₦50 billion for regional banks.
With less than 14 months left before the March 2026 deadline, many banks are exploring mergers and acquisitions to meet capital requirements. The CBN has already approved the merger between Providus Bank and Unity Bank, while Access Holdings Plc, Ecobank Nigeria, and Jaiz Bank Plc have met the new capital benchmarks. Analysts predict that banks may raise up to ₦5 trillion during the recapitalization period.
Surge in E-Payment Transactions
The CBN’s policies have significantly boosted electronic payment transactions in Nigeria. According to the Nigeria Interbank Settlement System (NIBSS), e-payment transactions reached $702.6 billion in 2024—a 79.6% increase from $400.5 billion in 2023. December 2024 recorded the highest transaction value at $76.7 billion due to high spending during the festive season. Transaction volumes also rose from 9.7 billion in 2023 to 11.2 billion in 2024, reflecting a 15.5% increase.
This surge is attributed to Nigeria’s cashless policy and recent cash shortages, which have pushed more consumers and businesses toward digital payments. The CBN continues to advocate for widespread adoption of e-payment solutions to align Nigeria’s financial system with global best practices.
Conclusion
The CBN remains committed to reinforcing financial oversight, ensuring compliance, and strengthening Nigeria’s banking system. By driving recapitalization, enhancing risk management, and promoting financial inclusion, the apex bank is positioning Nigeria’s financial sector for long-term resilience and economic growth. As digital transactions continue to rise, regulatory measures will play a crucial role in safeguarding consumers and maintaining financial stability.
