The Nigerian banking sector took a major hit on Monday following a policy directive from the Central Bank of Nigeria (CBN) that led to massive selloffs, particularly among the country’s leading tier-1 lenders.
The selloff came in response to the apex bank’s latest stance on the termination of the regulatory forbearance regime introduced five years ago. The CBN’s new guideline restricts the ability of affected banks to issue dividends and expand operations internationally, a move that has shaken investor confidence.
Market data showed that the five largest banks in Nigeria saw their cumulative market capitalization plunge by more than ₦361 billion, dragging their total valuation down to approximately ₦7.6 trillion. Investors dumped banking stocks en masse, seeking to hedge against the anticipated revenue and operational constraints that could follow the new regulatory environment.
The Nigerian Exchange (NGX) reported a substantial 403 basis point drop in the Banking Index, underscoring the magnitude of the market reaction. Among the worst-hit were ACCESSCORP, ZENITHBANK, and UBA, all of which hit their intraday price limits. Meanwhile, GTCO shed 0.56% in share value, Zenith Bank declined by 6.4%, and UBA fell by 5.7% from its opening value. First Bank Holdings also faced pressure, with a 6% drop in its market capitalization, while Access Holdings recorded the steepest decline at 8.3%.
The widespread losses in the banking sector overshadowed gains seen in select consumer goods stocks and dragged the broader market into negative territory. Stock analysts believe this bearish outlook could persist into the next trading session unless there is clarity or reversal from the CBN.
On the broader market front, the Nigerian equities market closed on a negative note. The All-Share Index (ASI) slipped by 14 basis points to settle at 115,269.09 points. This decline also reduced the year-to-date market performance to 11.99%, indicating a moderate cooling from earlier highs. Market breadth showed signs of weakness, with 43 decliners significantly outweighing 21 gainers.
The market’s response reflects the heightened sensitivity to monetary policy changes, especially in a climate where regulatory risks are increasingly factored into investment decisions. With financial sector reforms still unfolding, investors are bracing for continued volatility in bank equities over the near term.
 that led to...){kind=link}