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INTRODUCTION
The Nigerian banking and financial services landscape underwent a period of regulatory transformation in 2025. This transformation was primarily driven by concerted efforts by key regulatory authorities (including the Central Bank of Nigeria ("CBN"), the Securities and Exchange Commission ("SEC"), and other sectoral regulators) to fortify financial stability, enhance market integrity, and align domestic frameworks with global best practices. These reforms unfolded against a challenging macroeconomic backdrop marked by inflationary pressure, exchange-rate volatility, and tightening financial conditions, all of which placed significant pressure on financial institutions, businesses, and consumers alike. In response, regulators sought to balance price stability and systemic resilience with the need to sustain credit flow, investor confidence, and economic recovery.
Against this context, regulators introduced wide-ranging reforms spanning foreign exchange ("FX") governance, capital adequacy thresholds, compliance oversight, payment systems, and anti-money laundering safeguards. Notable among these was the launch of the Nigerian Foreign Exchange Code ("FX Code") to instil transparency, discipline, and ethical conduct in Nigeria's official FX market (the "Official Market") and enhance supervisory frameworks aimed at strengthening risk management, cybersecurity, and financial crime controls. These measures were complemented by monetary policy adjustments intended to curb inflationary pressures while gradually restoring confidence in the financial system. These regulatory shifts coincided with rapid innovation across Nigeria's financial ecosystem. The continued expansion of digital banking, fintech-bank partnerships, payment service providers, and digital asset platforms reshaped service delivery and competition within the sector. Innovations such as embedded finance, data-driven credit assessment, and expanded digital payment infrastructure advanced financial inclusion but also necessitated tighter regulatory oversight to address emerging risks. Consequently, regulators increasingly focused on balancing innovation with consumer protection, market integrity, and systemic stability.
A combination of the changes resulted in Nigeria successfully exiting the Financial Action Task Force's (FATF) grey list and intensification of efforts to modernise its financial architecture. Hence, 2025 became a defining year for regulatory recalibration. As 2026 unfolds, stakeholders across banking and payments are preparing for further refinements aimed at strengthening recent reforms and supporting sustainable growth in an uncertain economic environment. This publication provides an overview of the key regulatory developments in 2025 and offers a forward-looking assessment of the trends and regulatory priorities likely to shape Nigeria's banking and finance sector in 2026 and beyond.
A. BANKING SECTOR REFORMS
1. Implementation of the CBN's Banking Recapitalisation Programme
1.1 Following the CBN's announcement of a significant increase in the minimum paid-up capital across the various banking licence categories in Nigeria in March 2024, 2025 marked a significant year for the execution of capital raising in the Nigerian banking sector. During the year, banks adopted a range of strategies to meet the new requirements ahead of the 31st March, 2026 deadline. Such strategies included rights issues, public offers, private placements, and parent-company capital injections. In one case, there was a merger - the Providus–Unity Bank merger. This is the first CBN approved merger under the recapitalisation programme, signalling that consolidation remains a viable option for some banks.
1.2 As of early January 2026, at least 21 banks1 were reported to have successfully completed their capital raise. Some of the banks met their minimum capital benchmark through combinations of rights issues, public offers, private placements, parent company support and internal restructuring. These capital raises have significantly strengthened the capital bases of these banks and positioned them to increase their risk-bearing capacity, which will strengthen the Federal Government's drive towards a USD1 trillion economy by 2030.
1.3 Looking ahead to the deadline of 31st March, 2026, the key regulatory question is whether the CBN will grant any extensions to banks yet to meet the new thresholds or proceed with licence downgrades or other supervisory actions. The CBN's approach on this point will be critical in shaping the final phase of the recapitalisation programme and the structure of the Nigerian banking sector in the near to medium term.
2. Monetary Policy Tightening and Inflation Anchoring
2.1 Having aggressively tightened monetary policy throughout 2024, the CBN shifted focus in 2025 from further rate increases to consolidating the gains recorded through previous increases. During the year, the Monetary Policy Committee (the "MPC") maintained a restrictive stance, using the Monetary Policy Rate ("MPR") as a stabilisation tool to anchor inflation expectations and reinforce macroeconomic credibility.
2.2 By November 2025, with headline inflation already declining for the seventh consecutive month to 16.05% in October2, market expectations tilted towards a potential easing of monetary policy. The MPC, however, opted to hold the MPR at 27%, following a split vote among members and a decisive casting vote by the CBN Governor. The decision to hold was aimed at ensuring that the disinflationary trend was firmly entrenched before any easing was considered.
2.3 In addition to maintaining the headline rate, the CBN sustained tight liquidity conditions by retaining the Cash Reserve Ratio at elevated levels: 45% for deposit money banks and 16% for merchant banks, while keeping the liquidity ratio unchanged at 30%3.
2.4 Overall, the CBN's approach in 2025 reflected a cautious deployment of interest rates as a tool for inflation control rather than growth stimulation. The CBN's decision to hold off on rate cuts, even as inflation started to ease, showed it was prioritising long-term price stability and credibility over immediate economic relief. In our view, what happens with monetary policy in 2026 will largely come down to whether inflation keeps falling and how the CBN weighs up price stability against economic recovery. For now, the focus looks set to stay on keeping the economy stable, though that could shift as things develop in the course of the year.
3. Exit from Regulatory Forbearance and Enhanced Supervisory Oversight
3.1 In June 2025, the CBN introduced4 a coordinated set of transitional measures aimed at supporting banks' orderly exit from the regulatory forbearance regime implemented during the COVID-19 period. As a result, with effect from 30th June 2025, the CBN terminated all COVID-19-related forbearance measures, including waivers on Single Obligor Limits. Affected banks were required to realign their respective impacted credit exposures with existing prudential guidelines on classification, provisioning and asset quality. To facilitate balance sheet clean-up, the CBN temporarily waived the requirement that fully-provisioned loans be held for one year prior to write-off, allowing banks to reduce non-performing loan ratios, subject to internal governance approvals.
3.2 On the capital side, the CBN temporarily lifted regulatory caps on the recognition of Additional Tier 1 ("AT1") capital in the computation of capital adequacy ratios from 30th June 2025 to 31st March 2026. This measure was designed to bolster capital buffers during the transition period, while making clear that it does not replace the broader recapitalisation programme announced in March 2024.
3.3 To ensure that transitional reliefs translate into genuine balance sheet strengthening for the affected banks, the CBN imposed strict restrictions on capital distributions and expansionary activities for banks benefiting from the regime. These include the suspension of dividend payments, deferral of bonuses to directors and senior management, and a prohibition on investments in foreign subsidiaries or new offshore ventures, until full regulatory compliance is restored. In addition, the CBN introduced enhanced disclosure and supervisory engagement requirements. Affected banks are required to submit detailed quarterly disclosures to the CBN covering provisioning status, capital adequacy with and without reliefs, loan classification migration, and AT1 instrument usage. The affected banks must also prepare and submit comprehensive capital restoration plans outlining strategies for achieving full normalisation of capital and asset quality metrics.
3.4 Overall, the measures represent the CBN's firm approach to balancing prudential discipline with transitional flexibility, as the CBN seeks to reinforce resilience and stability across the banking sector.
4. Revised Guidelines for Agent Banking Operations
4.1 As part of its ongoing efforts to deepen financial inclusion, the CBN issued the revised "Guidelines for the Operations of Agent Banking in Nigeria"5 ("Agent Banking Guidelines") in October 2025. Agent banking allows third-party providers to deliver financial services on behalf of licensed deposit-taking institutions, particularly to underbanked populations in remote areas. The Agent Banking Guidelines, which took effect in October 2025, aim to strengthen the safety, efficiency, and accessibility of agent banking services. Implementation of specific provisions, such as agent location requirements and agent exclusivity rules, will take effect from 1st April, 2026.
4.2 From a market perspective, the updated Agent Banking Guidelines are expected to enhance confidence in agent-led financial services and support broader objectives of financial inclusion. In the medium term, clearer rules around agent deployment and operations should promote a more orderly, robust and sustainable expansion of agent banking in furtherance of the CBN's financial inclusion objectives.
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Footnotes
1. https://businessday.ng/companies/article/here-are-20-banks-that-have-met-the-new-cbn-capital-rules/
2. https://businesspost.ng/economy/how-cardoso-influenced-retaining-interest-rate-at-27-in-november/
3. https://www.cbn.gov.ng/MonetaryPolicy/decisions.html
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