THE Central Bank of Nigeria (CBN) has directed banks with unresolved ‘forbearance exposures’ to submit a Capital Restoration Plan as part of a regulatory measure.
Forbearance exposure refers to the temporary postponement of loan payments. Lenders and other creditors grant forbearance as an alternative to forcing a property into foreclosure or leaving the borrower to default.
The apex bank gave the order in a circular signed by its Director of Banking Supervision, Olubukola Akinwunmi, released on Monday, July 7.
The Capital Restoration Plan is to complement CBN’s measures, including termination of forbearance exposure and Single Obligor Limits waivers, suspension of payment of dividends, bonuses, and investment in foreign subsidiaries for affected banks.
“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 stated.
A check by The ICIR shows that a Capital Restoration Plan is a formal roadmap that outlines how a bank plans to return to full financial health, specifically, how it intends to meet all regulatory capital and asset quality requirements.
The apex bank had, in a notice on June 13, instructed all the banks with unresolved forbearance exposures to halt dividend payments, defer executive bonuses, and suspend all new investments in offshore subsidiaries, The ICIR reported.
The directive is aimed at strengthening capital buffers and ensuring adequate provisioning against impaired loans, especially those that risk breaching the regulatory Single Obligor Limit (SOL).
It is to remain in place until affected banks have fully provisioned for their forbearance exposures and phased them out entirely.
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According to the CBN, the recovery 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,” it said.
The apex bank also directed the banks to submit quarterly disclosures on key metrics to aid regulatory transparency and support supervisory oversight.
It said effective June 30, 2025, banks are to disclose “detailed provisioning status and reconciliation of affected credit exposures. CAR [cash reserve ratio] calculations with and without transitional reliefs. Classification migration data for restructured or impacted loan facilities and comprehensive disclosure of AT1 [additional tier 1] 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 focus on macro-financial stability, responsible banking practices, and standards,” the CBN added.
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