LAGOS, July 10 – A group of shareholders has asked the Central Bank of Nigeria (CBN) to review its proposed capital requirements for Financial Holding Companies (HoldCos), warning that the new rules could lead to repeated fundraising and weaken investor confidence.
The concerns were contained in a submission on the CBN’s Exposure Draft of the Revised Guidelines for Licensing and Regulating Financial Holding Companies in Nigeria. While supporting the bank’s efforts to strengthen financial stability, the shareholders said parts of the proposal could place an unnecessary capital burden on HoldCos that recently raised funds to meet the CBN’s banking recapitalisation requirements.
At the centre of the concerns is Guideline 7.1(i), which sets out two options for owning international subsidiaries. Under one structure, the parent HoldCo owns the subsidiaries directly. Under the other, ownership is through an intermediate holding company.
The shareholders argued that if the second structure is adopted, both the parent HoldCo and the intermediate HoldCo would be required to maintain regulatory capital equal to 120% of the underlying capital base, adding that this could amount to a duplication of capital requirements at two non-operating holding company levels.
According to the group, the proposal could force HoldCos to return to the capital market within a short period, leading to investor fatigue and reducing shareholders’ willingness to support future capital raising.
The shareholders also requested clarification on how capital already invested in foreign subsidiaries would be treated if the new ownership structure is adopted. They further raised concerns about proposed restrictions on dividend payments and provisions on interlocking directorships.
The CBN said the review is intended to address gaps in compliance, governance and operational efficiency identified since the HoldCo framework was introduced in 2014. The draft also proposes stricter rules on transactions between banks and related entities as part of broader regulatory reforms.
