A Look At Central Bank Of Nigeria’s Exposure Draft Of The Revised Guidelines For Licensing And Regulating Financial Holding Companies In Nigeria

On 10 June 2026, the Central Bank of Nigeria (“CBN”) released an Exposure Draft of the Revised Guidelines for Licensing and Regulating Financial Holding Companies (“FHCs”) in Nigeria, inviting stakeholder comments ahead of implementation. The proposed Guidelines seek to replace the extant 2014 framework introduced following Nigeria’s post-consolidation banking reforms.

The proposed revisions reflect the CBN’s broader regulatory objective of strengthening consolidated supervision, ring-fencing banking operations from non-banking risks, and improving governance, capital adequacy, and operational independence across financial groups.

The draft introduces significant structural, prudential, and governance changes that could materially reshape the operations of banking groups and financial conglomerates in Nigeria.

Key Highlights of the Exposure Draft

1. Revised Structure and Ownership Requirements

The draft reinforces the principle that an FHC must remain a non-operating entity established solely for the purpose of holding equity investments in financial subsidiaries, at least one of which must be a bank. Under the proposed framework:

1. An FHC must maintain at least 51% equity ownership in its subsidiaries;

1. Subsidiaries are prohibited from investing in affiliates within the same group structure;
2. FHC structures are limited to a maximum of two layers, namely:
   • a parent HoldCo; and
   • one intermediate HoldCo for offshore subsidiaries, subject to CBN approval.

The proposal also requires foreign subsidiaries to be held directly by the HoldCo or an approved intermediate HoldCo, effectively discouraging overly complex ownership arrangements. This reflects a deliberate regulatory move towards simpler and more transparent group structures, particularly for banking groups with extensive cross-border operations.

2. Enhanced Capital Requirements

One of the most consequential changes under the draft Guidelines is the revised capital requirement for HoldCos. The CBN proposes that an FHC must maintain regulatory capital exceeding the aggregate minimum capital of all its subsidiaries by at least 20%. To illustrate, if a group has a commercial bank subsidiary requiring ₦200 billion in minimum capital, an insurance subsidiary requiring ₦20 billion, and a pension subsidiary requiring ₦2 billion, the Holdco must hold at least ₦266.4 billion in regulatory capital, not ₦222 billion.

Importantly, only paid-in capital (paid-up share capital and share premium) will qualify for this purpose. This means that retained earnings and other reserves may no longer count toward satisfying HoldCo capital thresholds. The implication is significant. Banking groups may be required to undertake fresh capital raises, rights issues, private placements, or internal restructuring exercises to comply with the new capital expectations particularly in light of the just-concluded banking recapitalisation programme.

The draft further clarifies that excess capital in one subsidiary cannot be used to offset capital deficiencies in another, thereby reinforcing subsidiary-level financial independence.

3. Restrictions on Shared Services

The draft substantially narrows the scope of permissible shared services that may be provided by an FHC to its subsidiaries. Subject to prior CBN approval, the approved services are limited primarily to:

1. facilities management;

1. legal services; and
2. ICT services.

Functions such as risk management, compliance, internal audit, and company secretariat services are notably excluded from the approved list unless specifically authorised by CBN.

In practical terms, this means subsidiaries will increasingly be required to maintain independent governance, compliance, and control functions. While the proposal strengthens operational independence and risk management discipline, it may also increase operational costs across financial groups, particularly for smaller subsidiaries that may no longer benefit from centralised compliance and governance structures.

4. Restrictions on Intra-Group Transactions

The draft also tightens restrictions around intra-group lending and financial support arrangements. Under the proposed regime:

1. loans granted by banking subsidiaries to their parent HoldCos may be treated as a return of capital and deducted from the subsidiary’s regulatory capital;

1. unsecured exposures to related entities may attract full capital deductions; and
2. HoldCos are prohibited from leveraging subsidiary guarantees except where the loan is secured by dividend income or service level agreement payments.

The clear regulatory intention is to prevent banking subsidiaries from serving as liquidity support vehicles for HoldCos or non-bank affiliates. This represents a significant shift in the CBN’s supervisory posture and underscores the regulator’s focus on protecting depositor funds and limiting contagion risks within financial groups.

5. Strengthened Corporate Governance Standards

The Exposure Draft also introduces additional governance safeguards aimed at improving board independence and reducing conflicts within group structures. Notably:

1. subsidiaries are prohibited from acquiring shares in their HoldCo or sister subsidiaries;

1. directors within a group structure may only sit on the board of only one additional subsidiary;
2. serving employees of an FHC may not serve as non-executive directors within the group; and
3. an FHC ceases to be one and may lose its licence where it ceases to maintain control in the only, or all the Nigerian banking subsidiaries in the group for a period exceeding six consecutive months

These provisions reinforce the CBN’s emphasis on accountability, governance separation, and effective oversight.

Conclusion

The Exposure Draft marks another significant step in the CBN’s ongoing efforts to strengthen consolidated supervision and enhance the resilience of Nigeria’s financial system. At its core, the proposed framework seeks to ensure clearer separation between banking entities and non-bank affiliates, strengthen subsidiary-level governance and capitalisation, and reduce systemic risks arising from interconnected group structures.

If implemented in its current form, the revised Guidelines will likely compel financial holding companies to reassess their ownership structures, governance frameworks, shared service arrangements, and capital strategies. For banking groups with complex regional operations or heavily centralised structures, the operational and compliance implications could be substantial.

Stakeholders within the financial services sector will therefore need to carefully evaluate the draft provisions and prepare for potentially significant structural adjustments ahead of final issuance by CBN.