CBN’s proposed BHC rules could force Nigerian banks to restructure, Fitch warns

Fitch Ratings has warned that the Central Bank of Nigeria’s (CBN) proposed regulations for Bank Holding Companies (BHCs) could lead to significant organisational restructuring across Nigeria’s banking sector if implemented.

The warning is contained in Fitch’s latest report, “African Banking Groups’ Cross-Border Expansion to Continue,” published on September 14, 2026.

The report examined the expansion strategies of major African banking groups and highlighted the potential implications of the CBN’s proposed framework for financial holding companies.

What Fitch is saying

According to Fitch, the draft regulations would permit BHCs to hold direct or indirect equity interests in foreign subsidiaries through an intermediary holding company, representing a departure from the structure currently used by many Nigerian banking groups.

Fitch noted that most African banking groups operate through a structure in which a bank holding company directly owns the domestic banking subsidiary, foreign banking operations, and non-bank financial services businesses.

Under this arrangement, the holding company is typically regulated on a consolidated basis and subject to capital and liquidity requirements similar to those imposed on the banking subsidiary.

However, the agency observed that Nigerian and Moroccan banking groups currently follow a different model, where the domestic banking entity itself owns foreign banking subsidiaries.

• “Nigerian and Moroccan banking groups have a different structure, with the domestic banking entity having shareholdings in the foreign banking subsidiaries,” Fitch stated.

The ratings agency said the proposed framework could require affected institutions to reorganise their ownership structures.

• “Fitch believes that, if effected, these regulations could prompt several organisational restructurings,” the report noted.

High entry barriers limit foreign banks’ interest in Nigeria

Despite the aggressive expansion of Nigerian lenders across Africa and other markets, Fitch said Nigeria has attracted relatively little interest from foreign African banking groups seeking to establish operations in the country.

According to the report, the dominance of large domestic lenders, combined with macroeconomic challenges and regulatory requirements, has created significant barriers to entry.

• “Nigeria’s banking sector is moderately concentrated, with the largest five banks representing 52% of domestic banking sector assets at end-2025. However, these banks have competitive advantages, including low funding costs, large branch networks and leading digital and agency banking channels,” Fitch stated.

The agency added that the CBN’s higher paid-in capital requirements mean foreign banks would need to commit substantial resources to establish subsidiaries in Nigeria, further reducing the attractiveness of the market for new entrants.

Get up to speed

The CBN recently released an exposure draft seeking to revise the licensing and regulatory framework for Financial Holding Companies (FHCs) in Nigeria.

• An FHC is a non-operating parent company that owns stakes in multiple financial services businesses, including at least one banking subsidiary. While it provides strategic oversight, it is not expected to conduct banking activities or directly manage subsidiary operations.
• One of the key changes proposed in the draft framework concerns the ownership of offshore subsidiaries. Under the existing structure, Nigerian banks can directly own foreign subsidiaries. The new proposal would require such subsidiaries to be held directly by the holding company or through an intermediate holding company.

The proposed changes form part of the CBN’s broader effort to strengthen corporate governance, ring-fence risks within banking groups, and reinforce the distinction between holding companies and their operating subsidiaries.

What you should know

Fitch’s latest comments add to growing concerns among industry analysts over the potential impact of the proposed framework on Nigerian banks.

In July, Renaissance Capital (RenCap) warned that the new rules could force Nigerian banking groups to raise more than N1.7 trillion in additional capital while restructuring their operations to comply with the proposed requirements.

According to RenCap’s report, “Nigerian Banks: More Capital, Declining Returns,” the requirement for holding companies to maintain a capital buffer equivalent to at least 20% above the combined paid-up capital of their subsidiaries could materially dilute shareholder value and weigh on returns on equity.

The investment bank described the proposed capital buffer as the most significant aspect of the reforms, arguing that it could have far-reaching implications for the profitability and capital management strategies of Nigerian banking groups.