CBN directs banks to submit capital restoration plans as forbearance regime ends

The Central Bank of Nigeria (CBN) has directed banks to submit a Capital Restoration Plan as part of its efforts to support the exit from the forbearance regime.

In a circular signed by the CBN Director of Banking Supervision, Olubukola Akinwunmi, published on its website on Monday, the apex bank said the Capital Restoration Plan would complement its other measures.

This include termination of forbearance exposure and Single Obligor Limits waivers, suspension of payment of dividends, bonuses and Investment in foreign subsidiaries for affected banks.

CBN said, “To complement the above measures and ensure forward-looking capital planning, all affected banks are required to prepare and submit a comprehensive Capital Restoration Plan to the CBN on or before the 10th working day, following the end of the quarter with effect from June 30, 2025.

“The plan should detail the management’s proposed strategies to restore full regulatory compliance, including (but not limited to) cost optimisation initiatives, risk asset reduction, significant risk transfers, and necessary business model adaptations”, it added. .

It further states, “The plan must cover the entire period until full normalisation of capital and asset quality indicators is achieved.

“Plans submitted will be subject to regulatory review and approval, and will form the basis for continuous supervisory monitoring and engagement throughout the transition.”

 ”Effective June 30, 2025, banks are to disclose “Detailed provisioning status and reconciliation of affected credit exposures. CAR calculations with and without transitional reliefs.

“Classification migration data for restructured or impacted loan facilities and comprehensive disclosure of AT1 instruments, including issuance terms, usage, and related conditions.”

“The measures represent a firm but supportive framework for the final phase of exiting the regulatory forbearance regime, and reflect the CBN’s feat focus on macro-financial stability, responsible banking practices, and standards”, is also stated.