The CBN’s directive to suspend dividend payments by banks has elicited concerns about its implications on bank stocks and the wider economy. The CBN’s decision has led to increased volatility and declining share prices in the banking sector, raising concerns over recapitalization efforts and investor confidence. Market players urge caution and call for a balanced approach to regulation that safeguards both the stability of banks and market confidence, thereby supporting economic growth.
The Central Bank of Nigeria’s sweeping directive, which suspends dividend payments, defers management bonuses, and halts offshore investments, has jolted investor confidence in Nigeria’s banking sector, with sharp reactions following the regulator’s move across the Nigerian Exchange and among industry watchers.
The new policy, issued on June 13, 2025, is designed to compel banks to boost provisions and strengthen capital buffers by addressing the burden of regulatory forbearance and ensuring full compliance with Single Obligor Limits.
The CBN’s recent circular outlined measures to strengthen the banking sector’s capital base amid ongoing regulatory reviews. It directed banks currently benefiting from forbearance, especially on credit exposures and Single Obligor Limits, to suspend dividend payments to shareholders, defer bonuses to directors and senior management staff, and halt investments in foreign subsidiaries or new offshore ventures.
According to analysts at Renaissance Capital Africa, the directive represents a decisive shift in the CBN’s regulatory stance, pushing banks to prioritize actual liquidity over accounting profits.
