Nigeria’s biggest banking groups may be forced to raise as much as N370 billion in fresh capital under proposed Central Bank of Nigeria (CBN) rules that would reshape the country’s financial holding company (HoldCo) structure, a new report disclosed.
The CBN on June 11 released two exposure drafts—the Revised Guidelines for Financial Holding Companies and the Guidelines on Ring-Fencing of Closely Linked Entities, which analysts describe as the most significant overhaul of banking group structures in more than a decade. The documents were signed by Rita I. Sike, director of financial policy and regulation.
While the proposed reforms are designed to strengthen financial stability and shield deposit-taking institutions from group-wide contagion risks, investment research firm Zrosk Investment Management warns that the new requirements could create significant compliance costs, dilute shareholder value, and alter the economics of Nigeria’s integrated financial services model.
At the centre of the proposed changes is a
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