In a strategic move to reinforce capital buffers within Nigeria’s financial system, the Central Bank of Nigeria (CBN) has announced the temporary suspension of regulatory caps on the recognition of Additional Tier 1 (AT1) capital in banks’ Capital Adequacy Ratio (CAR) calculations.
The directive, which takes effect from June 30, 2025, and remains valid until March 31, 2026, is part of a broader framework designed to support a smooth and credible exit from the regulatory forbearance measures introduced during the COVID-19 era.
The new measure was communicated via a circular signed by Olubukola A. Akinwunmi, Director of Banking Supervision, as part of the apex bank’s continuing efforts to ensure macro-financial stability and resilience in the banking sector.
According to the CBN, the temporary adjustment is aimed solely at strengthening capital adequacy and is not intended as a substitute for the ongoing recapitalisation programme announced in its March 28, 2024 circular (Ref: FPR/DIR/PUB/CIR/002/009). The apex bank emphasised that this development should be viewed as a supportive intervention rather than a relaxation of prudential standards.
“This temporary lifting of regulatory caps on AT1 capital recognition is designed to bolster capital adequacy without undermining long-term capital planning or regulatory discipline,” the CBN stated.
As part of its transitional framework, the CBN has also imposed restrictions on banks benefiting from the reliefs. These include a suspension of dividend payments, bonuses to directors and senior management, and new investments in foreign subsidiaries. The restrictions were detailed in a separate circular dated June 13, 2025 (Ref: BSD/DIR/CON/LAB/018/008) and will remain in force until banks’ capital and provisioning levels are restored to regulatory thresholds.
To enhance transparency and regulatory oversight, banks are now required to provide detailed quarterly disclosures beginning June 30, 2025. These include: Current provisioning status, CAR calculations with and without transitional reliefs, Data on reclassified credit facilities, and
Comprehensive information on AT1 instruments, including issuance terms, utilisation, and compliance records.
Additionally, affected banks must submit a Capital Restoration Plan by the 10th working day after each quarter. The plan must outline actionable strategies to restore compliance with prudential norms, including cost-cutting measures, risk asset reduction, risk transfer mechanisms, and necessary business model adjustments. These plans will be subject to regulatory review and will serve as key documents for ongoing supervisory engagement.
The apex bank has urged banks to maintain close engagement with its Banking Supervision Department to ensure seamless implementation of all transitional measures.
“These integrated measures represent a firm but supportive framework for the final phase of exiting the regulatory forbearance regime and reflect the CBN’s strategic focus on macro-financial stability, responsible banking, and alignment with international best practices,” the circular concluded.
The development comes amid broader efforts by the CBN to safeguard the integrity of Nigeria’s financial system and ensure the long-term health and resilience of the banking sector in a post-pandemic economy.
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