The Central Bank of Nigeria (CBN) has issued a high-stakes directive to all commercial banks to conduct rigorous Solvency Stress Tests effective April 1, 2026.
This move, detailed in a circular dated March 6, 2026, serves as a “final audit of resilience” just as the March 31 recapitalization deadline expires.
By invoking Sections 13 and 63 of BOFIA 2020, the apex bank is moving to ensure that the newly raised capital (up to ₦500 billion for international banks) is not merely a “paper buffer” but is sufficient to withstand a 12-month economic shock.
The Stress Scenario: 12 Months of “Extreme Conditions”
The CBN is forcing banks to simulate a “perfect storm” of economic headwinds to see if their Capital Adequacy Ratios (CAR) remain above regulatory thresholds.
| Stress Factor | Required Simulation |
| Asset Quality | Progressive migration of performing loans to “Watchlist,” “Substandard,” and “Doubtful.” |
| Market Shocks | Sharp falls in commodity prices (Oil) and extreme FX rate volatility. |
| Governance Risk | 100% default assumption for all director and insider-related loans. |
| Macro Dynamics | Supply chain disruptions and contracting consumer demand. |
The “Insider Credit” Crackdown
In a significant move to address long-standing governance failures, the CBN has ordered a “Zero Tolerance” approach for insider-related exposures during this test:
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Severe Stress Assumption: All loans to directors or related parties must be treated as being in default.
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Full Provisioning: Banks must provide 100% cover for these loans in their stress scenarios, potentially wiping out significant portions of reported profits for banks with high insider-debt concentrations.
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The “Baseline” Rule: Banks must use the last examiner’s assessment as a starting point, preventing any “window-dressing” of current loan books before the test begins.
The Capital Penalty: Raising the Bar
The outcome of these tests will directly dictate how much more capital a bank may need to raise beyond the current recapitalization exercise:
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Shortfall Requirement: Banks must raise 100% of their reported stressed capital shortfall (or 50% of the CBN’s independent analysis, whichever is higher).
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18-Month Window: Once a shortfall is identified, banks have 18 months to plug the gap.
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Risk-Based Floor: This stressed capital level will become the new minimum requirement for that specific bank until the next testing cycle, which will occur six months after the capital raise.
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