CBN: Reinforcing Vision of Strong, Resilient Financial System
Since his appointment, the Governor of the Central Bank of Nigeria, Olayemi Cardoso has continued to drive his vision to uphold regulatory excellence and strengthen Nigeria’s financial system. Under his leadership, the CBN continues to set high regulatory standards to protect Nigeria’s financial ecosystem and ensure its alignment with global best practices, writes Festus Akanbi
By fostering a strong culture of compliance and strengthening risk management frameworks, the Central Bank of Nigeria’s leadership goal remains to protect Nigeria’s financial sector while ensuring its resilience and credibility locally and internationally.
To achieve these goals, the apex bank has reaffirmed its commitment to maintaining a transparent and resilient financial system by reinforcing regulatory compliance and risk management across Nigerian financial institutions.
The financial sector regulator recently held a high-level Mandatory Compliance and Anti-Money Laundering (AML) Training Workshop in collaboration with Citi, in Lagos.
During the event, the Special Adviser to the CBN Governor on Compliance, Ms. Shola Phillips, emphasised the need for strict adherence to global banking standards to sustain confidence in Nigeria’s financial sector.
“Regulators expect financial institutions to maintain dynamic, risk-based AML/CFT programmes that are responsive to the evolving financial environment. Proactive engagement with regulatory developments and the integration of innovative compliance solutions is essential for institutions to meet these expectations effectively,” Phillips stated.
The training, attended by compliance officers, trade operations specialists, and correspondent banking teams from various financial institutions, provided critical insights into global regulatory trends, emerging financial risks, and strategies for sustaining correspondent banking relationships.
Managing Director of Citi’s Correspondent Banking Group, Siobhan Ni Ealaithe, highlighted the critical role of robust governance frameworks in mitigating risks. She underscored the necessity of Know Your Customer (KYC), Know Your Business (KYB) and Know Your Transaction (KYT) protocols in preventing illicit financial activities.
Stephanie Bailey, Head of EMEA AML Risk Management for Foreign Correspondent Banking, provided a stark assessment of financial crime risks, noting that over $3 trillion in illicit funds flow through the global financial system annually. She urged financial institutions to strengthen due diligence measures, leverage technology-driven risk assessments, and uphold transparency in all transactions.
Speaking recently to bankers, Cardoso said the ethics and professionalism of bankers and treasurers are under constant scrutiny.
According to him, the apex bank introduced the FX Global Code for all authorised dealers and market participants to ensure full compliance with regulations.
He urged the Chartered Institute of Bankers of Nigeria (CIBN) to take the lead in upholding and demonstrating the highest standards in the industry.
“At the central bank, we have intensified surveillance of market activities to ensure compliance and eliminate bad actors who attempt to undermine the system. Together, we must build a market based on strong governance and transparency. As regulators, we will maintain a zero-tolerance approach to compliance violations,” he said.
Banking Sector Remains Robust
Cardoso explained that the banking sector remains robust with key indicators reflecting a resilient system.
“The non-performing loan ratio remains within the prudential benchmark of five per cent, showcasing strong credit risk management. The banking sector liquidity ratio comfortably exceeds the regulatory floor of 30 per cent, a level that ensures banks are maintaining adequate cash flow to meet the needs of customers and their operations. The recent stress test conducted also reaffirmed the continued strength of our banking system,” he said.
To ensure that our banking system can effectively support the growth of our economy, efforts to strengthen banks’ capital buffers were announced in 2023 with a two-year implementation window.
“I am pleased to note that a significant number of banks have raised the required capital through right issues and public offerings well ahead of the 2026 deadline! I believe that the banking sector is in a strong position to support Nigeria’s economic recovery by enabling access to credit for MSMEs and supporting investment in critical sectors of our economy,” he said.
In the same vein, Other Financial Institutions (OFIs) hold significant potential to drive productivity and economic growth by expanding access to credit and financial services for underserved individuals and businesses.
To unlock this untapped potential, the CBN aims to strengthen key institutions—particularly Primary Mortgage Banks (PMBs) and Microfinance Banks (MFBs)—to enhance their efficiency and impact.
“Our strategy includes implementing model mortgage foreclosure laws to stimulate lending and reduce delinquency, integrating PMBs and MFBs into the GSI platform to minimise non-performing loans, and leveraging Development Finance Institutions (DFIs) more effectively to provide increased on-lending facilities to well-managed OFIs,” he said.
Cardoso explained that the Nigerian payments ecosystem has been ahead of many advanced economies, yet has not always received the recognition it deserves.
He said that many innovations that other countries are only now experiencing have been part of our system for years. We must celebrate these successes, as they contribute to building our global reputation.
“Nigeria’s dynamic fintech ecosystem has driven financial inclusion and positioned the country as a hub of innovation in Africa. Despite a challenging external environment, Nigerian Fintechs continue to shine, attracting significant foreign investment and several have achieved global unicorn status this year,” he stated.
Recapitalisation of Banks
The ongoing recapitalisation of banks comes with several benefits to the economy, including helping the lenders take bigger risks by banking underserved markets, Cardoso said.
He spoke in Lagos at the 2nd International Financial Inclusion Conference 2024, with the theme: “Inclusive Growth—Harnessing Financial Inclusion for Economic Development”.
The CBN boss said it was in line with its efforts to deepen financial inclusion, the apex bank introduced new minimum capital requirements for banks.
He said: “This strategic move ensures that banks are well-capitalized, enabling them to take on greater risks, particularly in underserved markets. With stronger capital bases, banks can provide more loans and financial products to Micro Small, and Medium Enterprises (MSMEs), rural communities, and other vulnerable segments that have previously struggled to access formal financial services”.
The CBN had on March 28, 2024, announced a two-year bank recapitalisation exercise which commenced on April 1, 2024, and is expected to end on March 31, 2026.
The recapitalisation plan requires a minimum capital of N500 billion, N200 billion, and N50 billion for Commercial Banks with International, National, and Regional licenses respectively.
Cardoso said the recapitalisation policy not only strengthens financial stability but also serves as a catalyst for inclusive growth.
“By enabling banks to extend more credit to MSMEs, we enhance job creation and productivity. Furthermore, with increased capital, banks can invest in technology and innovation, crucial for driving digital financial services such as mobile money and agent banking. These technologies are key to breaking down geographic and economic barriers, bringing financial services to even the most remote areas,” he stated.
With less than 14 months to recapitalisation deadline, banks have stepped up preliminary consultations on the prospect of business combinations.
Analysts said there have been “more talks around mergers and acquisitions” as banks consider alternative options to fresh capital raising.
They said while the banks are expected to flood the market with offers, many of them have seen the inevitability of mergers and acquisitions.
The CBN approved the first merger and acquisition deal between Providus Bank and Unity Bank in 2024. Access Holdings Plc, Ecobank Nigeria, and Jaiz Bank Plc have met the new minimum capital requirements.
The CBN is the final signatory in a tripartite capital verification committee that includes the Securities and Exchange Commission (SEC) and Nigeria Deposit Insurance Corporation (NDIC).
e-Payment Transactions Soar
Electronic payment transactions in Nigeria rose to $702.6 billion in 12 months ended December 31, 2024, a report from the Nigeria Interbank Settlement System (NIBSS) has shown.
The e-payment data reached an all-time high and was the first time to hit the quadrillion mark.
According to NIBSS industry statistics on the e-payment report, the value recorded on the NIBSS Instant Payment (NIP) represents a 79.6 per cent increase over the $400.5mn recorded in 2023.
Although the e-payment data shows a steady increase throughout the 12 months of the year, the highest value was achieved in December 2024 when Nigerians spent a total of $76.7bn over electronic channels.
This came as the all-time high monthly record on the NIBSS electronic payment platform.
Also, the volume of transactions processed by NIBSS for the year jumped from 9.7 billion in 2023 to 11.2 billion in 2024. This represents a 15.5 per cent rise in the volume of electronic transactions year on year.
Stakeholders insist that the surge in e-payment transactions can be linked to the recent cash crunch experience and the cashless policy of the CBN limiting the amount of cash that can be withdrawn daily.
While pushing for the full use of the e-payment system, the CBN said for Nigeria to actively play on the world stage, “our payment system must be successfully benchmarked against the global best practices, as in most developed nations of the world”.
