Central Bank Of Nigeria: Revised Guidelines For Licensing And Regulation Of Financial Holding Companies In Nigeria

I.  BACKGROUND AND CONTEXT

On 10 June 2026, the Central Bank of Nigeria ("CBN") released an Exposure Draft of the Revised Guidelines for Licensing and Regulation of Financial Holding Companies in Nigeria (the "Guidelines"). The proposed Guidelines are aimed at strengthening the regulatory framework governing Financial Holding Companies ("FHCs"), addressing governance and operational issues that have emerged under the current regime, and promoting greater consistency in the supervision of banking groups and financial conglomerates.

Once finalised, the Guidelines will replace the existing Guidelines for Licensing and Regulation of Financial Holding Companies issued in August 2014, as well as the CBN Circular on the Definition and Structure of Holding Companies in Pursuance of the New Banking Model issued in December 2011.

II.  DEFINITION, STRUCTURE, AND ELIGIBILITY

A. Nature and Structure of Financial Holding Companies

Under the proposed Guidelines, a Financial Holding Company ("Holdco") is envisaged as a non-operating entity established primarily for investment and group oversight purposes. To qualify as a Holdco, the entity must hold equity interests in at least two direct subsidiaries engaged in financial services, one of which must be a bank. For this purpose, the term "bank" encompasses commercial banks, merchant banks, non-interest banks, and any other category of bank recognised by the Central Bank of Nigeria ("CBN"). In keeping with its status as a non-operating entity, a Holdco is prohibited from engaging in the day-to-day management or operational affairs of its subsidiaries, its functions being confined to strategic direction, investment management, and group-level oversight.

The proposed Guidelines permit a maximum of two layers within a Holdco structure, subject to CBN approval. Under the first model, the parent Holdco maintains direct ownership of its Nigerian subsidiaries, whilst foreign subsidiaries are held through an intermediate holding company. The second model adopts a simpler arrangement whereby the parent Holdco holds direct equity interests in all subsidiaries, including those situated outside Nigeria. However, where the laws of a foreign jurisdiction so require or in other exceptional circumstances, the CBN may approve the introduction of a third layer.

The proposed framework also introduces a number of structural safeguards designed to preserve group integrity and minimise excessive intra-group exposure. Notably, subsidiaries within a Holdco structure are prohibited from acquiring interests in other affiliates of the parent company. In addition, every Holdco must be duly incorporated with the Corporate Affairs Commission ("CAC") and maintain a controlling interest of not less than 51 per cent in each of its subsidiaries. The Holdco itself is also required to be registered as a person with significant control with the CAC or any other relevant authority.

Perhaps one of the more noteworthy innovations under the proposed regime is the introduction of a minimum holding period. Notably, a licensed Holdco must remain in operations for a minimum of five years before it may seek approval to dismantle the structure and revert to a mono-line banking model, a measure intended to promote regulatory stability and discourage frequent restructuring.

B.  Eligibility Criteria

The proposed Guidelines introduce a more detailed framework for assessing the eligibility of Holdco promoters. Promoters may comprise individuals, non-bank corporate investors, a combination of both, or existing banks. However, banks seeking to establish Holdco structures must satisfy additional prudential requirements.

In particular, the CBN will only permit promoters with strong governance, sound financial health, and satisfactory supervisory records. Existing banks must not have received an "Above Average" or "High" composite risk rating in any of their last three CBN or NDIC risk-based examinations. In addition, the CBN will assess key prudential indicators, including liquidity, capital adequacy, loan-to-deposit ratio, non-performing loans, and funding stability, reflecting its intention to ensure that only financially strong and well-governed institutions are permitted to own and control financial holding companies.

III.  PERMISSIBLE AND NON-PERMISSIBLE ACTIVITIES

The proposed Guidelines reinforce the principle that Holdco is a non-operating entity by clearly defining the activities it may undertake and those that are prohibited. A Holdco may hold equity interests in its subsidiaries and earn income from dividends, investments of surplus funds in government securities or bank deposits, gains from the disposal of subsidiary interests, and approved shared services arrangements.

Subject to the prior approval of the CBN, a Holdco may also raise international borrowings to capitalise subsidiaries, issue bonds and debentures, and provide limited shared services in areas such as facilities management, legal services, and information technology. Such services must be provided on an arm's-length basis and governed by board-approved Service Level Agreements.

Conversely, a Holdco is prohibited from investing in non-financial entities, pledging its interests in subsidiaries as security, establishing or disposing of subsidiaries without CBN approval, deriving income from unauthorised sources, bearing the operating expenses of subsidiaries, or dealing directly with the customers of its subsidiaries. Subsidiaries are similarly prohibited from assuming the expenses of the Holdco or those of other group entities. These restrictions are intended to preserve transparency, prevent excessive intra-group exposures, and reinforce the integrity of group structures.

IV. LICENSING REQUIREMENTS AND PROCESS

The Guidelines prescribe a two-stage licensing framework comprising the grant of an Approval-in-Principle ("AIP") and the subsequent issuance of a Final Licence. The process begins with a mandatory pre-application presentation to the CBN, following which a No-Objection Letter may be issued, enabling promoters to submit a formal application supported by the documentation prescribed under the Guidelines.

A key innovation is the introduction of a capital deposit requirement at the AIP stage. Non-bank promoters are required to deposit 100 per cent of the minimum regulatory capital of the proposed subsidiaries together with an additional 20 per cent buffer, while existing banks converting to a Holdco structure are required to bridge any shortfall between the prescribed Holdco capital and their existing paid-in capital. Promoters are prohibited from incorporating the Holdco prior to obtaining the AIP, and any subsequent changes to ownership or board composition require the prior approval of the CBN.

Applications for a Final Licence must be made within six months of obtaining the AIP and are subject to a pre-licensing inspection by the CBN to assess governance arrangements, infrastructure, operational readiness, and systems integration. Upon satisfactory completion, a Final Licence is granted upon payment of a non-refundable licensing fee of

₦100 million. Holdcos are required to commence operations within twelve months of licensing, failing which they may be exposed to regulatory sanctions, including revocation of the licence.

V.  CORPORATE GOVERNANCE

The Revised Guidelines strengthen the existing corporate governance framework for financial holding companies by imposing tighter controls on ownership and board representation. Subsidiaries are prohibited from acquiring shares in Holdco or fellow subsidiaries, while nominee companies holding investments on behalf of clients are subject to quarterly beneficial ownership disclosure requirements. The Guidelines also restrict interlocking directorships and limit Holdco influence over subsidiaries

by capping Holdco-appointed directors at 20 per cent (20%) of a subsidiary's board and restricting concurrent directorships within the group.

These restrictions reflect a deliberate effort to ensure operational independence of subsidiaries and prevent the Holdco from exercising de facto management control over subsidiaries through board representation. In addition, a Holdco that loses control of its banking subsidiaries for a sustained period risks losing its status and may be subject to licence revocation.

VI.  INTRA-GROUP RELATIONSHIPS AND TRANSACTIONS

The Guidelines reinforce the principle that a Holdco must remain a non-operating entity and must not exercise operational control over its subsidiaries. Cross-participation in management and board meetings is prohibited, day-to-day interference in subsidiary operations is restricted, and asset transfers require prior CBN approval.

All intra-group transactions and shared services arrangements must be conducted on an arm's length basis, supported by board approvals and periodic value-for-money audits. The framework also imposes reporting obligations relating to shared services.Also on branding, a Holdco is prohibited from advertising itself or its subsidiaries in any form, physically or digitally, except in connection with an offer of its own shares.

VII.  PRUDENTIAL AND FINANCIAL REGULATION

Holdcos are now required to maintain capital exceeding the combined minimum capital requirements of their subsidiaries by at least 20 per cent. The framework also tightens restrictions on intra-group transactions by prohibiting insider-related borrowings, limiting contingent liabilities to 20 per cent of shareholders' funds, and restricting the use of subsidiary guarantees to secure Holdco borrowings.

Assume BoSik Holdco owns three subsidiaries: BoSik Bank, BoSik Insurance, and BoSik Asset Management have minimum capital requirements of ₦2 billion, ₦300 million, and

₦150 million respectively. Under the proposed Guidelines, BoSikHoldco is required to maintain its own regulatory capital at least 20 per cent above the combined minimum capital of its subsidiaries. Accordingly, BoSik Holdco must maintain standalone capital of not less than ₦2.94 billion (i.e., ₦2.45 billion plus 20 per cent).

In addition, loans granted by banking subsidiaries to Holdcos or other group entities attract adverse capital treatment, reflecting the CBN's intention to strengthen financial resilience, minimise contagion risks, and promote prudent group-wide capital management.

VIII.  AML/CFT/CPF COMPLIANCE AND SUPERVISORY FRAMEWORK

The Guidelines require Holdcos to maintain effective AML/CFT/CPF frameworks and appoint a senior management-level Compliance Officer responsible for regulatory reporting. They also impose extensive quarterly and annually reporting obligations

covering financial performance, governance, intra-group exposures, and insider-related transactions. While the CBN retains primary oversight of Holdcos, subsidiaries will continue to be regulated by their respective sector regulators, thereby enhancing consolidated supervision and regulatory accountability.

IX.  OUR RECOMMENDATION

The proposed Guidelines represent a notable shift in the CBN's approach to the regulation and supervision of financial groups. They signal a clear move towards stronger corporate governance, greater financial resilience, and more effective group-wide oversight, bringing Nigeria's regulatory framework closer to international standards and emerging best practices.

Admittedly, the new regime will impose additional compliance obligations on HoldCos and their subsidiaries. Higher capital requirements, expanded reporting duties, stricter governance expectations, and tighter controls on intra-group transactions are likely to increase operational costs. Existing groups may also need to revisit legacy structures, review shared services arrangements, enhance reporting capabilities, and invest in people, processes, and technology to meet the heightened regulatory expectations.

These increased obligations should, however, be viewed in the broader context of the objectives the CBN seeks to achieve. The proposed framework is designed to promote stronger governance, improve transparency, enhance operational independence, and reduce contagion risks within financial groups. Its emphasis on arm's length transactions, business continuity, recovery planning, and accountability should strengthen confidence among regulators, investors, and market participants.

Perhaps most importantly, the Guidelines provide much-needed clarity for increasingly complex and diversified financial groups. While compliance will undoubtedly come at a cost, the new requirements are better viewed as safeguards intended to promote the long-term stability, soundness, and sustainability of Nigeria's financial system.

Against this background, HoldCos and their subsidiaries should begin reviewing their existing structures, governance arrangements, and shared services models, and actively participate in the CBN's consultation process ahead of the 9 July 2026 deadline. Early preparation and proactive engagement will be critical to ensuring a seamless transition and positioning financial groups to thrive under a more robust regulatory framework.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.