The Central Bank of Nigeria (CBN) has given banks until the end of the week to submit recapitalisation plans and ended waivers on troubled loans introduced during the pandemic, as it moves to strengthen the banking sector’s resilience.
Lenders are to submit “a comprehensive capital restoration plan to the CBN on or before the 10th working day, following the end of the quarter from June,” it said in a circular on its website on Monday.
Banks recapitalisation plans must include current provisioning status, restructured loans, capital adequacy calculations and additional Tier 1 capital instruments and will be subject to regulatory review and approval, it said.
The central bank, effective June 30, also scrapped Covid-era relief measures, including rules that allowed lenders to issue risky loans without setting aside adequate reserves and exceed the lending limit to a single borrower.
Last month, the central bank ordered lenders under regulatory forbearance to halt dividend payments, director bonuses, and foreign investments.
Access Bank, Fidelity and FCMB are the major banks most exposed to forbearance loans, Investment bank, Renaissance Capital (RenCap) Africa, revealed in a June report.
In absolute terms, Renaissance Capital said, “We estimate regulatory forbearance exposures at $304m, $887m, $134m, $296m for AccessCorp, FirstHoldCo, FCMB Group, and Fidelity Bank respectively.”
Guaranty Trust Holding Company (GTCO), STANBIC, and ZENITH BANK, have largely exited forbearance loans from their books, according to Meristem Securities analysts in a note to clients.
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