Business
CBN’s Dividend Clampdown: Panic spreads as banks scramble to appease angry shareholders
A cloud of uncertainty continues to hover over Nigeria’s financial sector following the Central Bank of Nigeria’s (CBN) recent regulatory directive that restricts banks with outstanding forbearance-related exposures from paying dividends.
This policy has sent shockwaves across the capital market, triggering widespread concern among shareholders and financial analysts alike. However, major Nigerian banks are moving swiftly to allay fears, emphasizing their financial resilience and pledging strict compliance with the CBN’s guidelines.
The directive, announced under reference BSD/DIR/CON/LAB/018/008, mandates all commercial banks to regularize any breaches of the Single Obligor Limit (SOL) and resolve credit facilities granted under regulatory forbearance by June 30, 2025. Banks unable to comply by this deadline face dividend suspension and intensified regulatory scrutiny.
Zenith Bank: “We Have Met the Requirements”
Zenith Bank Plc, Nigeria’s largest bank by Tier-1 Capital, has been vocal in reassuring investors of its readiness to meet the CBN’s conditions. The bank confirmed it has raised sufficient capital, exceeding the CBN’s new minimum threshold of ₦500 billion. It also clarified that its forbearance exposure is limited to only two customers, with full provisioning already underway.
“We are confident in meeting shareholders’ dividend expectations in the 2025 financial year,” the bank stated in a release to the Nigeria Exchange Group on June 17, 2025. “We have taken appropriate and comprehensive steps to ensure full provisioning by June 30, 2025.”
A recent report by Rencap Capital, however, estimated Zenith Bank’s total regulatory forbearance exposure at a staggering $1.6 billion – more than any other Nigerian bank. But the bank insists its exposures are manageable and adequately covered by provisions.
FCMB Group: “We Have Reduced Forbearance Exposure by 60%”
First City Monument Bank (FCMB) Group has also come forward with details of its exposure. According to a June 2025 statement, the group’s Nigerian banking subsidiary holds credit exposures under regulatory forbearance amounting to ₦207.6 billion—down from ₦538.8 billion in September 2024. These loans, currently classified as Stage 2, represent credit to three entities and two obligors.
“We anticipate that exiting the CBN forbearance regime will initially spike our Stage 3 loans to about 11.5%, but this figure is expected to fall below 10% by year-end due to loan book growth,” FCMB stated. “We expect to maintain sufficient buffers to support our dividend policy.”
The bank highlighted ongoing efforts, including converting a ₦23.1 billion convertible loan into equity and downstreaming the proceeds to strengthen capital adequacy. Rencap estimates FCMB’s total forbearance exposure at $134 million.
Fidelity Bank: “Our Public Offer Was Oversubscribed by Over 200%”
Fidelity Bank Plc reported that it has already raised ₦273 billion via a public offer and rights issue—both oversubscribed significantly—and plans to raise another ₦200 billion via private placement to meet the ₦500 billion capital requirement. The bank said its exposure under the SOL forbearance relates to two obligors, while four others account for additional credit forbearance.
“We have proactively made substantial provisions on these facilities and taken targeted and comprehensive steps to ensure full provisioning or return to performing status by June 30, 2025,” Fidelity Bank stated in a release dated June 18, 2025.
Rencap pegs Fidelity’s total forbearance exposure at $296 million and warns that it could face a potential SOL breach. Still, Fidelity insists it will exit all forbearance arrangements and remain eligible to pay dividends in 2025.
Access Holdings: ‘We Are Fully Compliant’
Access Holdings Plc—parent company of Access Bank—has taken a more bullish stance, declaring that it has already met and exceeded the CBN’s capital requirement as of December 31, 2024. It further stated that its banking subsidiary is fully compliant with the SOL regulation and remains on track to exit forbearance by June 30, 2025.
“With strong capital buffers and full regulatory compliance, we remain committed to delivering sustainable value and maintaining dividend payments,” the Group said in a June 18 disclosure on the Nigerian Exchange.
Access Bank’s forbearance exposure is estimated by Rencap at $304 million—relatively moderate in comparison with peers. Still, the bank has reassured its stakeholders of uninterrupted dividend policy.
The Bigger Picture
The CBN’s new policy underscores a broader concern about the asset quality and risk concentration in Nigeria’s banking sector. Analysts suggest that a significant chunk of the affected loans are concentrated in the Oil and Gas sector—particularly upstream and refinery subsectors. This overexposure to a volatile industry has prompted regulators to demand tighter compliance and stronger provisioning.
Rencap’s report states:
“While forbearance exposures are not always tied to a single client, we believe they are predominantly concentrated in loans to a major Oil & Gas counterparty.”
Other major banks, such as UBA and FirstHoldco, also face significant forbearance exposures, estimated at $282 million and $887 million, respectively. These figures raise red flags about the sector’s overall credit risk posture and the systemic implications if banks fail to resolve these exposures within the CBN’s deadline.
Investor Anxiety vs Bank Optimism
Despite the optimistic tone adopted by banks, market analysts remain cautious. There is growing concern that some institutions may struggle to meet provisioning targets, especially amid Nigeria’s challenging macroeconomic environment marked by currency instability, inflation, and high borrowing costs.
Nonetheless, banking executives have continued to assure stakeholders of their preparedness. As one Zenith Bank executive noted:
“We have always prioritized sound risk management and capital adequacy. These recent steps only reaffirm our position as a resilient and well-governed financial institution.”
Fidelity Bank echoed a similar sentiment:
“We are fully committed to regulatory compliance and remain on track to exit all forbearance programs by mid-year.”
FCMB’s statement reinforced this narrative:
“We have already reduced our forbearance exposure by over 60% and are confident of maintaining our dividend trajectory.”
Access Holdings offered a note of confidence:
“Our shareholders can rest assured that Access Bank is compliant with the CBN’s requirements and remains a leader in capital strength.”
As June 30, 2025, approaches, all eyes will remain on the financial sector and the CBN to see how strictly the new rules are enforced. While most Tier-1 banks appear confident, the ability to meet these requirements without disrupting operations or losing investor trust will be the ultimate test.
In the short term, shareholders are likely to remain jittery. But if the banks deliver on their promises, Nigeria’s financial sector may emerge stronger, more transparent, and better capitalized—one dividend at a time.