CBN’s Proposed BHC Rules Could Force Nigerian Banks to Restructure, Fitch Warns

Fitch Flags Potential Restructuring as CBN Moves to Tighten Bank Holding Rules

The proposed Central Bank of Nigeria (CBN) rules governing Bank Holding Companies (BHCs) could force some Nigerian banking groups to restructure their ownership arrangements, according to Fitch Ratings.

The warning comes as the CBN moves to strengthen its regulatory framework for financial holding companies and the relationship between parent companies, domestic banks and foreign subsidiaries. Fitch said the proposed framework could require some Nigerian lenders to reorganise their group structures, particularly where foreign banking subsidiaries currently operate directly under Nigerian banks.

/ You Might Also Like /

Fitch flags potential restructuring for Nigerian banks

Fitch Ratings raised the issue in its assessment of African banking groups and their growing cross-border operations.

The rating agency said the proposed CBN framework would permit financial holding companies to own foreign subsidiaries either directly or through an intermediate holding company.

This could require changes among Nigerian banking groups whose foreign subsidiaries currently sit directly under their domestic banking entities.

Under a holding-company structure, the parent company typically owns the domestic bank, foreign banking subsidiaries and other financial businesses separately. This structure can allow regulators to apply consolidated capital, liquidity and risk-management requirements across the wider group.

Fitch noted that several major African banking groups already operate under this type of structure, while Nigerian and Moroccan banking groups have more commonly placed foreign banking subsidiaries directly under their domestic banking operations.

The proposed CBN rules could therefore have a more significant structural effect on some Nigerian banking groups.

Proposed framework comes after major bank recapitalisation

The proposed rules arrive after the CBN's extensive banking-sector recapitalisation programme.

In March 2024, the central bank raised the minimum capital requirements for commercial banks. The new thresholds set minimum capital at ₦500 billion for commercial banks with international authorisation, ₦200 billion for national commercial banks and ₦50 billion for regional commercial banks.

Banks had until March 31, 2026, to meet the new requirements.

The CBN said the recapitalisation was designed to strengthen the resilience of the banking sector, improve banks' capacity to absorb financial shocks and increase their ability to support economic activity through lending.

Banks could meet the new requirements through fresh capital raising, mergers and acquisitions or changes to their licence categories.

The timing is significant because Nigerian banks have already committed substantial resources to strengthening their balance sheets. Any additional requirements arising from the proposed holding-company framework could therefore influence capital allocation and strategic decisions across banking groups.

Foreign subsidiaries are becoming increasingly important

The potential impact of the proposed rules is also linked to the growing importance of international operations to Nigeria's major banks.

Fitch has highlighted the increasing contribution of foreign subsidiaries to the earnings and asset bases of several leading Nigerian banking groups.

For United Bank for Africa (UBA), foreign subsidiaries accounted for 77% of group net income in 2025, up from 44% in 2024. The subsidiaries also represented 52% of the group's total assets at the end of 2025.

Access Bank has similarly expanded its international operations. Foreign subsidiaries contributed 48% of group net income in 2025, compared with 30% in 2021. Their share of total assets also increased from 23% to 51% during the same period.

These figures demonstrate the growing financial significance of overseas operations for Nigerian banking groups.

Consequently, changes to the way these subsidiaries are owned, capitalised and regulated could have implications for the broader strategy and financial management of affected banks.

Additional capital requirements could emerge

Beyond possible organisational changes, analysts have also raised concerns about the potential capital implications of the proposed framework.

Nairametrics reported that Renaissance Capital estimated Nigerian banking groups could require more than ₦1.7 trillion in additional capital under the proposed rules.

The estimate relates particularly to a proposed requirement for holding companies to maintain a capital buffer equivalent to at least 20% above the combined paid-up capital of their subsidiaries.

Renaissance Capital said such a requirement could affect banks' capital management strategies and returns on equity.

However, the ₦1.7 trillion figure represents the investment bank's assessment of the potential impact. It should not be treated as a confirmed amount that Nigerian banks will ultimately be required to raise until the CBN finalises the framework.

CBN seeks stronger oversight of financial groups

The proposed BHC framework forms part of the CBN's wider effort to strengthen supervision of financial groups and limit the transmission of risks between related entities.

The central bank has also proposed tighter restrictions around transactions between banks and affiliated companies, including intra-group lending, guarantees and asset transfers.

The objective is to create clearer boundaries between regulated banking operations and other businesses within the same corporate group.

For banks with extensive subsidiaries, the approach could result in greater scrutiny of how capital moves within the group and how risks associated with non-bank or overseas businesses affect the regulated banking entity.

Rules could influence future banking expansion

The proposed framework could also influence how Nigerian banks approach international expansion.

Nigerian banks have become some of the most prominent African banking groups, with operations extending across multiple countries.

Fitch has identified Access Bank, UBA, Zenith Bank and First HoldCo among Nigerian banking groups with significant international operations.

The agency also noted that the five largest Nigerian banks accounted for 52% of domestic banking-sector assets at the end of 2025.

Their scale, established customer networks and digital banking infrastructure give them significant positions within the domestic market. At the same time, international expansion has become an important component of the growth strategies of some of these institutions.

Changes to holding-company requirements could therefore influence how banks structure future acquisitions, establish subsidiaries and deploy capital across different markets.

Implications for real estate and housing finance

The proposed banking rules also matter to the property sector because Nigerian banks remain important sources of financing for real estate developers, businesses and prospective homeowners.

Changes in capital requirements or group structures could influence how banks allocate funds between different business segments.

For property developers, the key issue will be whether regulatory changes affect the availability, cost and tenor of bank financing.

Real estate projects often require substantial upfront capital and long repayment periods. Developers rely on commercial banks and other financial institutions for construction finance, working capital and, in some cases, mortgage-linked funding.

If banks respond to additional capital requirements by prioritising certain areas of their balance sheets, credit conditions could change for sectors that depend heavily on bank financing.

The eventual effect on housing and real estate will, however, depend on the final CBN rules and how individual banks respond to them.

Final CBN rules will determine the scale of the impact

The Fitch warning relates to proposed regulations rather than a final framework. The eventual impact on Nigerian banks will therefore depend on the provisions adopted by the CBN.

For affected banking groups, the key issues will include the treatment of foreign subsidiaries, the structure of financial holding companies, capital requirements and rules governing transactions between related entities.

The proposed framework could lead to changes in ownership structures and capital allocation strategies, particularly among banks with large international operations.

For investors, businesses and property-market participants, the development is important because changes in banking regulation can influence the availability and cost of credit across the economy.

As the CBN progresses with the framework, the final rules will provide greater clarity on the extent of restructuring required and their implications for Nigerian banks, cross-border expansion and lending to sectors such as housing and real estate.

READ MORE