The Nigerian Holdco banks reckoning

A quick rant before we begin.

Dear regulators, if you ever needed a model to emulate, look at what the CBN is today. This is how it should be done.

A well-crafted draft regulation, released to the public, with a genuine invitation for feedback before it becomes law. That is institutional maturity.

The era of shock and awe regulation should be behind us. Dropping directives on a Friday evening to create a frenzy serves no one. We understand this is the season of content creation and viral moments, but the rules that drive an entire industry are far too important to be delivered with the energy of your way or the highway. Regulation is a conversation, not an ambush.

Well done to the CBN #NotAGenZBaddie

End of rant.

What it actually is

An exposure draft, dated June 10, 2026, revising the 2014 FHC guidelines, with comments due July 9. A 1-month consultation window for a document that reshapes the structure of every major banking group in Nigeria is itself worth commenting on. GTCO, Access, FBN HoldCo, Stanbic IBTC, FCMB, and the newer converts are all directly in scope.

The 5 changes that matter, and what sits beneath them

The capital rule in Section 7.1.

A holdco must now maintain minimum regulatory capital exceeding the sum of its subsidiaries’ minimum regulatory capital by at least 20 per cent, and only paid-in capital (paid-up plus share premium) counts. This is a quiet bombshell.

Retained earnings, the engine through which Nigerian banks have historically compounded capital, are excluded from the test. Coming straight after the recapitalisation programme, where groups raised fresh equity to meet the March 2026 bank minimums, the holdco is now told it must sit 20 per cent above the aggregate of its subsidiaries.

For a group whose bank alone carries a N500bn minimum, the holdco threshold becomes the bank plus every other licensed subsidiary, plus a fifth on top. It is very possible that holdcos with multiple licensed subsidiaries across pensions, insurance, and payments, will find the arithmetic uncomfortable. And Section 7.1(ii) closes the obvious escape route: excess capital in one subsidiary cannot offset a shortfall in another. Capital is trapped at entity level.

The 51 per cent ownership floor in Section 2.1(xi)

Several holdcos hold positions in pension or insurance subsidiaries below that line, often for historical or partnership reasons.

They now face a binary choice: buy up to 51 per cent or divest entirely, because Section 5.2(iv) gives a 6-month divestment clock once control is lost. Expect a wave of minority buyouts and asset sales. This is, frankly, an M&A pipeline announcement dressed as prudential regulation.

The organisational restructuring in the foreign subsidiary rule is elegant and overdue. Foreign subsidiaries move out from under the Nigerian bank and up to the holdco, either directly or via an intermediate holdco per the Appendix 1 models.

The logic is sound: it ring-fences the Nigerian bank’s capital from the African expansion adventures, which is sensible after a decade in which Ghana’s domestic debt exchange and various FX crises ate into subsidiary equity that ultimately sat on Nigerian bank balance sheets.

UBA and Access, the two great pan-African networks, are the most affected. The migration itself will be a multi-year exercise in regulatory approvals across fifteen-plus host jurisdictions, share transfers, and capital gains considerations. Nobody should pretend this is a paperwork exercise.

The shared services regime is the CBN telling holdcos it has seen the game. Shared services income had quietly become a revenue line through which holdcos extracted value from banking subsidiaries outside the dividend channel. The new rules confine permissible shared services to facilities, legal, and ICT, require prior written CBN approval, mandate arm’s length pricing with board consent on both sides, and impose a value for money audit every 2 years filed with Banking Supervision.

Combined with the prohibition on holdcos bearing subsidiary expenses and vice versa, the message is unambiguous: the holdco lives on dividends, and the era of creative intercompany charging is over.

The intra-group lending provisions in 7.8 carry real capital teeth. Loans from a banking subsidiary to its holdco are treated as a return of capital and deducted from the bank’s capital adequacy computation. Bank lending to fellow subsidiaries attracts 100% risk weight even when fully secured, and is deducted from capital if unsecured.

This effectively kills the holdco as a borrowing vehicle funded by its own bank, and makes group treasury optimisation through the bank balance sheet prohibitively expensive in capital terms.

The governance tightening

The interlocking directorship cap, 1 subsidiary board only per holdco director, and the 20% ceiling on holdco directors sitting on any subsidiary board, will force board reshuffles across the sector.

The prohibition on subsidiary management attending holdco board meetings, and the explicit ban on the holdco involving itself in credit approval, are aimed at a practice everyone in the market knows happens: group CEOs running the bank by proxy. Whether a guideline can change behaviour that is cultural rather than structural is the open question.

The licensing economics

A N20 million application fee and a N100 million final licence fee, with non-bank promoters required to deposit 100% of the holdco’s minimum capital with the CBN before approval in principle. That deposit requirement, parked at the CBN through the application process, is a serious cost of capital hurdle for any new entrant and an effective moat around the incumbents. The 5-year lock-in before a holdco can reverse its structure also removes the optionality some boards thought they retained.

We like what the documents stands for and where it is headed BUT

• The direction is correct and the diagnosis honest: the 2014 framework allowed overhead inflation, governance blurring, and capital arbitrage between entities. But 3 things deserve scrutiny.
• The paid-in capital only definition is unnecessarily blunt; excluding audited retained earnings from the holdco capital test punishes precisely the organic capital generation regulators claim to want. We had this same issue around the capital raising program for banks. Are retained earnings not real ?????
• The 20% mark-up lacks any published analytical basis; it reads like a round number rather than a calibrated buffer.
• The cumulative effect of trapped capital at entity level, expensive intra-group funding, and dividend-only holdco income narrows the economic case for the holdco structure itself.

The CBN may find that some groups respond by collapsing back into mono-line banks via the CMNIB route the guidelines helpfully provide, which would be an ironic outcome for a reform meant to strengthen holdcos.

There is a real concern around the recapitalisation programme concluded recently and this new layer of holdco capital requirements arriving after the deadline.