Cardoso: New Risk-based Capital Rules to Solidify Bank Stability, Restore Investor confidence

•  Directors charged to drive consolidation, rebuild trust, and anchor stability in post-reform era

Nume Ekeghe

Governor of Central Bank of Nigeria (CBN), Olayemi Cardoso, has said the apex bank’s new risk-based capital framework will serve as a critical anchor for financial system stability, ensuring that recent banking sector recapitalisation translates into real resilience and renewed investor confidence. Cardoso said this at the Chartered Institute of Directors, Nigeria, induction ceremony in Lagos yesterday.

He charged directors to guide institutions through consolidation, strengthen governance frameworks, and rebuild stakeholder trust through transparency and accountability.

 Cardoso, who was represented by Director, Banking Supervision, CBN, Olubukola Akinwunmi, stated that the apex bank complemented recapitalisation with a series of regulatory measures aimed at strengthening governance and empowering directors across the banking system. According to him, key among these are the Circular on Compliance with Insider Related Credit Limits (February 17, 2025), which reinforces prudential discipline by restricting preferential lending to insiders; the Corporate Governance Guidelines (2023), which define clear standards on board composition, independence, tenure, and responsibilities in line with global best practice; and the end of regulatory forbearance alongside the introduction of risk-based capital requirements to align capital adequacy with institutional risk profiles.

 Others include stricter fit-and-proper criteria for directors to ensure only qualified individuals serve on boards, enhanced disclosure and transparency rules covering financial reporting and related-party transactions, and mandatory board evaluation and succession planning requirements to ensure continuity and stability. He stressed that these measures were not punitive, but enabling, providing directors with a stronger framework to exercise stewardship with discipline, foresight, and confidence.

He said, “The adoption of Risk-Based Capital Requirements represents a cultural shift in our financial system. Capital adequacy is no longer about size alone; it is about risk alignment ensuring capital planning anticipates both current and emerging risks, strengthening frameworks for credit, market, and operational risk, taking responsibility for compliance without reliance on regulatory forbearance and promoting prudent expansion and discouraging reckless lending or overexposure.

“Risk Based Capital Requirement embeds risk awareness into every strategic decision, ensuring that recapitalisation translates into genuine stability, entrenches the going concern status of our banks and instils confidence by both the banking and investing public in the Nigerian banking system.

“Given the position of the banking system and the pivotal role it plays in the economy, this stance of the Central Bank of Nigeria is expected to reverberate across all sectors of the Nigerian economy with an elevation in the standards of corporate governance observed across corporations in Nigeria.”

Cardoso urged directors to move beyond passive oversight to become active custodians of institutional stability, balancing profitability with prudence and ensuring that compliance is matched with strategic foresight.

He said, “As directors, your responsibilities extend beyond boardrooms. You are custodians of governance in a time when regulatory expectations are higher, requiring boards to align with prudential standards.  Stakeholder trust must be rebuilt and sustained. Strategic foresight is essential, as institutions adapt to technological disruption, global competition, and evolving customer needs.

“The central bank views directors as partners in ensuring that recapitalisation and regulatory reforms translate into stronger institutions, not just larger balance sheets.

“To our newly inducted directors, your induction today is not just ceremonial, it is a call to stewardship. You are joining a community dedicated to advancing corporate governance and ethical leadership. The choices you make in boardrooms will shape the future of Nigeria’s economy.

“The Central Bank of Nigeria stands ready to engage with you, to provide clarity, and to work collaboratively in building a financial system that is resilient, inclusive, and globally competitive. “