The Central Bank of Nigeria (CBN) has warned that increased capital buffers should not lead to excessive risk-taking, urging bank boards to recalibrate risk appetite frameworks and align capital allocation with long-term value creation.
The apex bank made this known following the completion of the banking sector recapitalisation exercise, which strengthened capital positions across the industry.
The position was stated by Dr. Blaise Ijebor, Director of Risk Management Department and Chief Risk Officer at the CBN, during a virtual risk management roundtable organised by the Association of Enterprise Risk Management Professionals (AERMP) on Thursday.
What he is saying
Ijebor emphasised that capital alone is not sufficient to guarantee stability in the banking system.
- “Capital builds strength, but governance sustains it.”
He noted that past banking crises showed that weak governance, poor credit risk practices, and incentive-driven lending could undermine even well-capitalised institutions.
Ijebor stressed that increased capital should not encourage excessive risk-taking, urging boards to align capital deployment with long-term value creation.
He added that risk and compliance professionals must now play more strategic roles in guiding decision-making.
He explained that the recapitalisation exercise was designed as a forward-looking intervention aligned with global standards, incorporating stress testing, capital adequacy, and recovery planning.
Get up to speed
The CBN recently concluded its recapitalisation programme aimed at strengthening the resilience of Nigerian banks.
- A total of 33 banks met the new minimum capital requirements by the March 31, 2026 deadline.
- The exercise raised about N4.65 trillion over a 24-month period.
- Capital adequacy ratios across the sector now exceed Basel benchmarks.
- Domestic investors accounted for 72.55% of the total capital raised.
The programme marks a significant milestone in efforts to position the banking sector for sustained growth and improved shock absorption.
More insights
Ijebor highlighted key risk areas that banks must address in the post-recapitalisation phase.
- He identified balance sheet vulnerabilities, operational and integration risks, systemic risks, and governance concerns as critical areas of focus.
- He stressed the importance of rigorous stress testing, accurate asset valuation, and strong board oversight.
- Ijebor also emphasised the need for robust anti-money laundering and counter-terrorism financing frameworks.
- He noted that recapitalisation presents an opportunity to strengthen enterprise risk management systems and improve data quality.
According to him, the success of the exercise will depend on how effectively banks integrate risk considerations into their strategic planning and governance structures.
What you should know
The recapitalisation exercise has reshaped Nigeria’s banking landscape, with most institutions successfully meeting new capital thresholds.
- About 37 banks were affected by the exercise, with 33 meeting the requirements.
- All listed banks were among those that complied with the new capital rules.
- The programme recorded participation from both domestic and international investors.
- Foreign investors accounted for 27.45% of the total capital raised.
The outcome reflects growing investor confidence in Nigeria’s banking sector, but regulators say sustained discipline and strong governance will determine long-term success.
