On the 13th of June, 2025, the Central Bank of Nigeria released a Letter to all Banks in Nigeria, directing all those that are "operating under approved regulatory forebearance regimes, specifically in relation to credit exposures and Single Obligor Limits" to temporarily suspend dividend payments, Bonuses and investments in foreign subsidiaries. While the CBN's intention must have been noble, the weekend that followed was quite a long one for Bank shareholders and most likely would have had some of them develop hypertension.
On the first trading day of the subsequent week the NGX banking sector went into panic mode, as the bank tickers were in the red, with some banks shedding almost the maximum allowable loss for the day. Before long, reports started to trickle in on the likelihood of GTCO and Stanbic IBTC Holdings being exempted from the sledge hammer, and their tickers started recovering. But shareholders and investors were still in the dark as to the fate of their banks and what would follow, with so many speculations in the air. They pondered, "what is the stock of a Nigerian bank worth without dividend for up to two years, afterall they do not trade at encouraging price to earning multiples?" The panic continued until the banks had to individually release statements of clarification to their shareholders on the Nigerian Stock Exchange, which then began to restore confidence. The CBN in turn, having seen the unintended consequence of their letter had to release a press statement on June 17, 2025 to clarify the situation and reassure everyone that the banking sector was strong and resilient.
There are several matters arising from that incident which investors and analysts have raised. One of such is that they kept wondering why the CBN would roll out its sledge hammer and give a directive that would directly affect bank Shareholders without the shareholders and investing public having the privilege of knowing the level of forebearance for each bank based on their Financial statements. Is it fair to the investing public?
Perhaps there is need for more transparency in banks' reporting to include forebearnce levels and Single obligor limits, and other things that may be of concern to shareholders, in clear terms, so that the investing public can clearly see the stance of each bank and know the real cash profits and positions of the banks, rather than have them report paper profits and have some aspect kept away from their financial statements but which could come back to haunt them and their shareholders in the future just like in this case. Hope the CBN looks into this.
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