The Central Bank of Nigeria (CBN) has proposed a significant overhaul of the regulatory framework for Financial Holding Companies (FHCs),
including measures to enhance the operational independence of subsidiaries by restricting the parent company’s influence over lending and credit decisions.
In a circular dated June 10, 2026, the apex bank issued guidelines and key revisions to mitigate risks arising from the conduct of non-core banking activities within banking groups. Key proposals in the draft include strengthening capital requirements for FHCs, regulating shared services, establishing clear eligibility requirements for promoters seeking to set up FHCs, streamlining organisational structures, and mandating that FHCs hold a minimum 51% equity stake in each subsidiary.
The Holdco model was introduced in 2014 to separate core banking activities from non-core financial services activities, thereby reducing the risk that problems in one part of a financial group threaten depositors’ funds. It was a necessary upgrade from the initial universal
banking guidelines, under which banks could conduct a wide range of financial services directly and indirectly through closely connected
business entities, ultimately raising concerns about risk concentration, operational structure, and conflicts of interest across banking and nonbanking businesses.
Industry participants, stakeholders and members of the public are expected to review the new exposure draft and submit comments to the CBN on or before July 9, 2026, after which the apex bank will issue final guidelines.
Strengthening Capital Requirements
This new draft automatically presents a capitalisation hurdle, especially following ongoing recapitalisation exercises across the Nigerian
financial services sector. The recently concluded recapitalisation of banks raised the minimum requirements across all banking tiers. The
Securities and Exchange Commission’s (SEC) upward review of minimum capital requirements for regulated capital market operators, including asset managers and fund managers, has direct implications. The same applies to the ongoing insurance-sector recapitalisation under the National Insurance Commission.
Where a Holdco owns a Fund/Asset management, banking, and Insurance subsidiary, the capital burden increases, making the recapitalisation efforts less a subsidiary issue and more a group-wide requirement, thereby prompting fresh capital-raising efforts to close
compliance gaps. This may increase pressure on already-fragile dividend policies, especially given that First Holdco, Access Holdings, and UBA all failed to pay dividends in FY’25.
A case in point is First Holdco, which remains the only major Holdco currently in breach of existing capital requirements because its parent
company’s paid-in capital is lower than the aggregate capital requirement of its subsidiaries. The Central Bank of Nigeria (CBN) clarified that
the minimum paid-in capital must be calculated strictly as par value of issued shares plus share premium.
According to its audited FY’25 results, First Holdco’s paid-in capital stood at ₦480.6 billion, comprising ₦22.23 billion in share capital and
₦458.4 billion in share premium. This level remains inadequate under the proposed revised framework, suggesting that the group may require additional capital injection to close the compliance gap and strengthen its regulatory capital position. Although recent actions,
including the completed ₦45 billion private placement in March 2026, have improved the group’s capital base, shareholders’ approval of
the ₦253 billion capital raise further highlights management’s ongoing efforts to enhance capitalisation and align the Holdco with evolving
regulatory expectations.
The capital requirements for the SEC’s regulated entities in Table 1.0 are the legacy minimum capital requirements. SEC circular No 26-1 materially increased the capital thresholds, meaning First Holdco’s capital market subsidiaries could require substantially higher capital than reflected under the old framework. The same applies to all FHCs with capital market subsidiaries. Although the compliance deadline extends to June 2027, the revised thresholds mean the Parent Holdco’s capital burden will increase.
A review of the estimated minimum capital requirements and Tier 1 shortfalls under the proposed framework, as presented in Table 2.0. This shows that Access Holdings faces the largest estimated capital shortfall of ₦120.0 billion, followed by GTCO at ₦103.7 billion, First Holdco at ₦90.0 billion, and Stanbic IBTC Holdings at ₦11.8 billion. In addition, the CBN draft introduces a mandatory requirement to form a Holdco for promoters of closely linked entities that establish or operate banking subsidiaries. This provision could have broader structural implications for bank-led groups such as Zenith Bank and UBA, which are not currently organised as Holdcos but may be required to
restructure if the final guidelines are implemented as proposed.
Consequently, the proposed CBN framework could make capital compliance a key consideration in management’s strategic decisions, as the new draft requires that a Holdco and its subsidiaries comply with requirements prescribed by their respective sector regulators, potentially accelerating internal restructuring, capital raising, or subsidiary-level realignment.
From an investor’s perspective, this introduces a more cautious outlook for dividend-paying banking Holdcos, as the draft explicitly restricts a Holdco from paying dividends until all stipulated capital requirements have been met. Dividend expectations remain a core part of the Investment case for FHCs, and the implementation of this new framework could affect near-term payouts, as dividends become less dependent on earnings alone and more on regulatory capital headroom, provisioning levels, subsidiary capital needs, and the cost of restructuring.
Regulation of Operational Efficiency
Shared services are common in diversified financial groups because they allow entities to centralise functions, lower operating costs and reduce duplication. However, when these services are not properly governed, they could pose operational, regulatory, and consumer-protection risks. The new draft proposes that shared services be provided at arm’s length and that transactions in respect of such services require the consent of the board of directors of the FHC and the relevant subsidiary. Also, a value-for-money audit in respect of shared services shall be conducted at least once every two years by an approved auditor, and the report shall be submitted to the CBN.
A typical Holdco may have shared services in technology, customer data infrastructure, payment systems, human resources, compliance and procurement. Beyond governance, segregating these functions across all subsidiaries increases operating costs. Groups may need to ring-fence customer data; that requires re-onboarding for every customer referred between closely linked entities. This directly faults the centralised rhetoric that banking groups have leveraged for over a decade.
Access Holdings, GTCO, Stanbic IBTC Holdings, and First Holdco appear highly susceptible because their structures include banking, asset management, insurance, and other businesses. While the regulation may improve transparency, consumer protection and prudential soundness, it introduces the risk of raising group cost-to-income ratios, slowing profitability and reducing the contribution of
non-bank businesses to consolidated earnings.
CBN Tightens HoldCo Rules to Strengthen Oversight of Banking Groups
One of the key revisions in CBN’s 2026 exposure draft is the proposed streamlining of the organisational structure and corporate governance
of Financial Holding Companies. The draft also contains requirements aimed at preventing circular or cross-ownership within a HoldCo group. Subsidiaries, including those under an approved intermediate HoldCo, cannot acquire shares in the parent HoldCo or in other group
subsidiaries. Nominee subsidiaries are also barred from investing client funds in the HoldCo or any group subsidiary.
The draft tightens board-overlap rules between HoldCo and its subsidiaries. It prohibits HoldCo staff from being appointed as non-executive
directors of HoldCo or any of its group subsidiaries. It also limits a HoldCo director to only one additional board within the group, meaning
the director may serve on the HoldCo board and one subsidiary board.
In addition, HoldCo directors must not make up more than 20% of any subsidiary’s board. Additionally, under the revised framework, FHCs
would be permitted to directly hold equity interests in foreign subsidiaries, rather than having such interests held through their Nigerian
banking subsidiaries.
This marks a shift from the broader, principle-based structure contained in the 2014 draft guidelines to a more specific, model-based
framework. The 2014 draft allowed a financial holding company to operate with a maximum of two hierarchies, a parent financial holding
company and an intermediate financial holding company. However, it did not provide a detailed structural model showing how Nigerian and
foreign subsidiaries should be positioned within the group.
The 2026 draft provides greater clarity by setting out two permissible HoldCo models. Under Model 1, the parent holding company directly holds equity investments in each Nigerian subsidiary, while an intermediate holding company holds equity investments in foreign subsidiaries. Under Model 2, the parent holding company operates a single-tier structure and directly holds equity interests in all
subsidiaries, including both Nigerian and foreign subsidiaries.
By requiring foreign subsidiaries to sit directly under the Holdco or an intermediate Holdco, rather than under the Nigerian banking subsidiary, the CBN is reinforcing the original objective of the Holdco framework: ring-fencing depositors’ funds from risks outside core banking. The change should also reduce governance complexity, improve consolidated supervision and limit the transmission of offshore subsidiary risks to the Nigerian deposit-money banks.
Ownership and Control Requirements
Another key revision to the CBN’s 2026 HoldCo circular requires FHCs to hold at least a 51% equity stake in each subsidiary; this is intended to make HoldCo the clear controlling parent of every entity within the group, thereby removing any ambiguity around ownership.
This key revision has very little current impact on the sector, as all listed banks already meet this requirement.
Implications
For affected banking groups, including Access Holding Plc, United Bank for Africa Plc, Guaranty Trust Holding Company Plc, and Zenith Bank Plc, the revised structure may create near-term restructuring and accounting implications. Where foreign subsidiaries are currently held through the Nigerian banking subsidiary, transferring those interests to the HoldCo or an intermediate HoldCo could result in one-off costs associated with share transfers, regulatory approvals, legal and advisory fees, and tax considerations.
This would also change how distributable income and dividends paid appear in the Holdco’s and the Nigerian bank’s separate books.
