CBN Proposes Stricter Banking Rules with New Ring-Fencing Guidelines for Financial Groups
The Central Bank of Nigeria (CBN) has introduced draft guidelines aimed at tightening oversight of banks and other financial institutions operating within corporate groups. The move is designed to strengthen financial stability, protect depositors’ funds, and reduce risks linked to interconnected financial businesses across the country.
Under the proposed framework titled “Guidelines on Ring-Fencing Operations of Closely Linked Entities in the Nigerian Financial System,” the regulator seeks to clearly separate the operations of affiliated companies. The policy would ensure that banks and their related entities do not mix responsibilities, services, or financial activities in ways that could expose customers or the financial system to risk.
According to the CBN, led by Governor Olayemi Cardoso, the new rules would also enforce stronger corporate governance. Boards of related financial entities would be required to operate independently, with limits placed on shared directors—capped at no more than 20 percent of board membership across affiliated firms.
The draft also introduces tighter rules on financial dealings within corporate groups. All transactions between linked entities must be conducted at arm’s length, properly documented, and reported quarterly. In addition, loans or guarantees between affiliated companies would require prior approval from the CBN, signaling a tougher stance on internal financial support that could distort risk management.
To further protect consumers, the CBN is pushing for strict separation of customer funds, data, and technology systems. Each entity will be required to maintain independent records, conduct its own customer verification, and avoid sharing sensitive data without consent. The regulator also proposed a holding company structure for financial groups, or alternatively a full merger under a single license. Stakeholders have until July 9, 2026, to submit feedback on the draft.
source: The Guardian