Central Bank of Nigeria (CBN) has proposed a major overhaul of regulations governing financial holding companies (HoldCos), seeking to strengthen oversight of banking groups and prevent parent companies from interfering in the operations of their subsidiaries.
Gatekeepers News reports that the move is aimed at protecting depositors’ funds, improving corporate governance and reducing risks within the financial system.
In an exposure draft released on June 10, the apex bank proposed that financial holding companies must maintain at least a 51 percent ownership stake in their subsidiaries. The draft forms part of a review of the guidelines first introduced in 2014 to regulate banking groups that operate through holding company structures.
A key provision of the proposed rules would stop holding companies from participating in the credit administration and loan approval processes of their subsidiaries. The CBN said HoldCos should not take over the responsibilities of subsidiary boards or management teams, a move designed to ensure operational independence and accountability.
The regulator also seeks to prevent situations where customer deposits or bank resources are used to support other businesses within the same corporate group. Under the proposal, loans granted by a banking subsidiary to its parent holding company would be treated as a return of capital and deducted when calculating the bank’s capital adequacy ratio.
According to the CBN, the review became necessary after years of implementation revealed gaps in the existing framework. The bank said the revised guidelines are intended to strengthen regulatory oversight, improve governance standards and align the sector with evolving market realities.
The draft guidelines have been circulated to financial holding companies, banks, other financial institutions and the public for comments. Industry stakeholders have until July 9 to submit feedback before the rules are finalised.
The proposal could have significant implications for major Nigerian banking groups operating under holding company structures, as it seeks to draw a clearer line between ownership and management while safeguarding customer funds from being channelled to affiliated businesses.
