Nigeria’s new bank Holding Company rules have a one-word problem

In June 2026, the Central Bank of Nigeria released its Exposure Draft on Financial Holding Company (FHC) licensing and regulation, the rulebook that will govern how groups like Access Holdings, FBN Holdings, GTCo and Stanbic IBTC Holdings structure their banking and non-banking subsidiaries going forward.

Buried inside it is a single word the draft never defines, and that omission could trigger one of the more disruptive compliance episodes Nigerian banking has seen in a decade.

The word is “bank.”

Section 19(8) of the Banks and Other Financial Institutions Act (BOFIA) 2020 caps the equity a bank can hold in a foreign subsidiary at 10% of its shareholders’ funds.

It is a sensible rule: it stops Nigerian depositors’ money from being overexposed to risk in foreign jurisdictions.

But BOFIA wrote that cap with the old world in mind. That is a world where a Nigerian bank was simply a bank. Today, most of the country’s largest banks sit inside holding company structures (popularly called HoldCos), with the licensed bank as one subsidiary among several.

The statute never says whether the 10% cap applies only to the bank itself, or to everything the holding company owns above it.

The Exposure Draft had a chance to settle this. It didn’t.

Why this isn’t a technicality

Several Nigerian banking groups have, in good faith and often at the CBN’s own encouragement, spent the past few years building out foreign subsidiaries through their holding companies — a structure that mirrors how JPMorgan, HSBC, BNP Paribas, Mitsubishi UFJ Financial Group(MUFJ) and Standard Bank organise cross-border operations everywhere else in the world.

If the CBN interprets Section 19(8) to reach equity held at the holding company level, several of these groups would suddenly find themselves in breach of a rule they had no reason to think applied to them.

The consequence would not be a paperwork fix. It would mean forced disposals of foreign stakes, likely at distressed prices, in markets that are often thin and illiquid to begin with.

Multiple Nigerian groups selling similar assets on a compressed timeline would depress the very prices they are trying to realise, deepen losses by way of value destruction, and dent the confidence of the international investors and development partners these same banks are trying to attract, there creating reputational damage. It would also collide directly with the CBN’s ongoing bank recapitalisation programme, forcing lenders to manage two competing capital demands at once.

What good regulation looks like elsewhere

Well, good regulation looks something like this. The Basel III framework applies capital rules to banking groups on a consolidated basis while still preserving solo-entity requirements underneath.

The Bank of England’s PRA and South Africa’s Reserve Bank both run the same two-tier logic: a clear, auditable rule at the licensed-entity level, and a separate group-wide prudential metric that captures the bigger picture without punishing legitimate holding company structures.

In other words, this is not a problem Nigeria has to solve from the scratch. It could adopt the same architecture just one to three moves. One of which is to introduce a separate, group-level foreign equity ratio — measured against the FHC’s consolidated capital.

This will ensure the CBN retains full visibility into aggregate cross-border exposure while avoiding supervisory conflict

Also, even with a clean fix, groups that built foreign positions between 2020 and 2024, before any implementing regulation existed, deserve a realistic runway to adjust, not a cliff edge.

So a phased compliance window with milestone certifications along the way, would let institutions rebalance in an orderly way instead of racing each other to the exit at the same time. Let us avoid our previous experience where rushed compliance deadlines rarely produce better-capitalised banks, only better-lawyered ones.

The transition question matters just as much

Even with a clean definitional fix, the groups that built foreign positions between 2020 and 2024, before any implementing regulation existed, deserve a realistic runway to adjust, not a cliff edge.

A phased compliance window of at least 36 months, with milestone certifications along the way, would let institutions rebalance in an orderly way instead of racing each other to the exit at the same time. Nigeria has been here before: rushed compliance deadlines rarely produce better-capitalised banks, only better-lawyered ones.

A clarification, not a concession

While the provision’s goal of preventing Nigerian depositors’ capital from being overextended abroad, is sound and worth preserving in full, the CBN should define the terms precisely enough that Nigeria’s banking groups can comply with confidence, rather than guess and hope based on ambiguity.

Regulatory clarity of this kind is not a cost to the system. Rather, it allows Nigerian banking groups to keep building the kind of cross-border scale that a serious financial centre needs, without operating under a rule nobody can read the same way twice.

Paul Chukwunedu Madiebo is a Chartered accountant (ACA). He holds an MSc in Finance, Accounting and Management from the University of Bradford and writes on Nigerian banking regulation and prudential policy in his personal capacity. The views expressed are his.