The Central Bank of Nigeria (CBN) has unveiled a draft revision of its guidelines for Financial Holding Companies (HoldCos), introducing stricter capital, governance, ownership, and intra-group transaction requirements that could significantly alter how banking groups operate in Nigeria.
Under the proposed framework, HoldCos would be required to maintain regulatory capital at least 20% above the combined minimum capital requirements of their subsidiaries. The draft also stipulates that excess capital in one subsidiary cannot be used to offset capital deficiencies in another, effectively requiring each entity within a financial group to remain independently capitalized.
The new rules further tighten corporate governance standards by restricting overlap between HoldCo and subsidiary leadership structures. Staff of a HoldCo would be barred from serving as non-executive directors within subsidiaries, while cross-attendance at board and management meetings would be prohibited. The CBN says these measures are aimed at strengthening operational independence and reducing concentration risks within financial groups.
Another key provision requires HoldCos to maintain a minimum 51% equity stake in each subsidiary, reinforcing control and simplifying oversight across financial conglomerates. The draft also proposes that foreign subsidiaries be held directly by the HoldCo rather than through Nigerian banking subsidiaries, a move designed to streamline group structures and improve regulatory compliance.
The regulator is also targeting intra-group lending practices. Loans granted by banking subsidiaries to their parent HoldCos would attract severe capital penalties, limiting the ability of parent companies to rely on subsidiary balance sheets for funding. Analysts say this could force HoldCos to become more financially self-sufficient by depending on dividends, market funding, and investment returns instead of internal borrowing.
If adopted, the revised guidelines are expected to increase compliance costs, strengthen corporate governance, and enhance the resilience of Nigeria’s financial system. However, industry observers note that the stricter requirements may also raise barriers to entry and place additional capital pressures on existing financial groups.
Stakeholders have until July 9, 2026, to submit comments on the exposure draft before the CBN finalizes the new regulatory framework.
