CBN’s Dividend Freeze: A Step in the Right Direction?
Written by Blessing Ajibuwa on June 16, 2025
The Central Bank of Nigeria (CBN) has directed banks operating under regulatory forbearance to suspend dividend payments, defer bonus for executives, and halt investments in foreign subsidiaries. This move aims to strengthen the banking sector’s resilience by ensuring stronger capital bases and genuine capital injections.
Key Highlights
– *Strengthening Bank Capital*: The CBN’s decision is designed to ensure that banks operate on a stronger capital base, attracting genuine capital and promoting prudent internal capital retention.
– *Recapitalization Exercise*: The move supports the ongoing recapitalization exercise, curbing financial engineering and ensuring fresh capital inflows into banks.
– *Impact on Banks*: Some banks may struggle to pay interim dividends due to this directive, but experts believe it’s a step in the right direction for promoting stability and confidence in the banking sector.
Expert Opinions
– *Tunde Amolegbe*: The Managing Director of Arthur Steven Asset Management Limited believes the CBN’s decision is aimed at keeping the recapitalization exercise on track, ensuring actual injection of fresh capital into banks.
– *Ayokunle Olubunmi*: Head of Financial Institutions Ratings at Agusto & Co. warns that some banks may struggle to pay interim dividends but expects the resolution of challenged loans before December 2025.
Implications
– *Improved Capital Retention*: The directive promotes capital retention, boosting stock values and ensuring banks meet existing and future obligations.
– *Enhanced Stability*: The move is expected to enhance stability and confidence in the banking sector, promoting sustainable economic growth.
