E-Financial
CBN to Bar HoldCos from Influencing Banks’ Lending Decisions
Central Bank of Nigeria (CBN) has proposed a sweeping overhaul of the regulatory framework for Financial Holding Companies (HoldCos), including measures to strengthen the operational independence of subsidiaries by prohibiting parent companies from participating in lending decisions and credit approval processes.
The move would also require the HoldCos to maintain a minimum 51 per cent ownership stake in their subsidiaries.
A bank holding company is a corporation that owns a controlling interest in one or more banks but does not itself offer banking services.
The proposed reforms, contained in the ‘Exposure Draft of the Revised Guidelines for Licencing and Regulation of Financial Holding Companies in Nigeria,’ posted on the apex bank’s website, were aimed at strengthening governance, enhancing accountability and ensuring clearer ownership structures within Nigeria’s increasingly diversified financial groups.
In prohibiting parent companies from participating in lending decisions, it stated that a HoldCo shall not: “Be involved in credit administration and approval processes of any of its subsidiaries.”
It added: “Loans by a banking subsidiary to its HoldCo would be regarded as a return of capital and deducted from the capital of the bank in computing the bank’s capital adequacy ratio.”
According to CBN, the review became necessary after years of implementing the existing framework introduced in 2014.
The draft signed by Dr. Rita Sike, director, Financial Policy and Regulation Department, stated: “Following several years of implementation, the CBN has identified areas within the extant Guidelines that require enhancement to strengthen the operational effectiveness and regulatory oversight of Financial Holding Companies.
“Accordingly, the Guidelines has been reviewed to address observed gaps and align with evolving regulatory and market developments.”
One of the most significant changes proposed by the regulator is the introduction of a mandatory majority ownership requirement for all subsidiaries under financial holding companies.
Highlighting the key amendments, the apex bank stated that the revised framework would introduce, “Ownership and Control Requirements: Requiring FHCs to hold a minimum of 51 per cent equity stake in each subsidiary and to be registered as a person with significant control by the appropriate corporate registration authority.”
The proposed requirement is expected to strengthen the ability of HoldCos to exercise effective oversight over subsidiaries while eliminating ambiguities around control and accountability within financial groups.
The CBN also moved to draw a clear line between the responsibilities of parent companies and those of subsidiaries by prohibiting HoldCos from interfering in operational and business decisions.
According to the draft guidelines, a HoldCo shall not “Arrogate to itself any of the powers or functions of the board or management of any of its subsidiaries or associates.”
The regulator further stated that: “Without prejudice to Section 18 of BOFIA 2020, the practice whereby members of the Board or Management of a subsidiary attend meetings of the Board of the HoldCo and vice versa is prohibited.”
In a particularly strong provision targeted at preserving the independence of subsidiary institutions, the apex bank stated that a HoldCo shall not: “Interfere in the day-to-day activities of the subsidiaries.”
The draft further provides that parent companies must not compel subsidiaries to take instructions from them in the conduct of business.
According to the CBN, a HoldCo shall not: “Require its subsidiaries (including any employee, staff, manager, officer or director thereof) to take directives or act on the instructions of the HoldCo in its decision-making process, or in relation to the conduct of its business in any way whatsoever.”
Beyond governance reforms, the proposed framework also introduces stricter capital requirements for financial holding companies.
The CBN stated: “A HoldCo shall have and maintain a minimum regulatory capital which shall exceed the sum of the minimum regulatory capital of its subsidiaries by at least 20 per cent.”
It added that only paid-in capital would be recognised when assessing compliance with the requirement.
The draft further clarified: “It is the capital of the HoldCo that is applied to the subsidiaries. Consequently, excess capital in one subsidiary shall not be used to make up a shortfall in another subsidiary.”
The revised framework equally tightens oversight of shared services arrangements among members of financial groups.
According to the apex bank, “The HoldCo shall not engage in any transaction or maintain any business relationship with any of its subsidiaries, except such transaction is conducted at arm’s length.”
The guidelines further state that: “Shared services shall be provided at arm’s length. Transactions in respect of such services shall require the consent of the boards of directors of the FHC and the relevant subsidiary.”
To ensure accountability, the CBN directed that: “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 submitted to the Director, Banking Supervision Department, CBN not later than March 31 of the year following the year the audit relates.”
The regulator also tightened rules governing intra-group lending and insider-related transactions, declaring that: “There shall be no insider-related borrowings within a HoldCo.”
Federal Capital Territory High Court has ordered Stanbic IBTC Bank Limited to pay N15 million in damages to two former customers after finding that the bank unlawfully retained and processed their personal information after they had terminated their banking relationship.
In a judgment delivered on July 29, Justice Kayode Agunloye also directed the bank to erase all personal data belonging to the claimants that it is not legally required to retain and restrained it from further processing or using such information without lawful authority or the customers’ consent.
The court held that the bank breached the Nigeria Data Protection Act (NDPA) 2023, the claimants’ constitutional right to privacy under Section 37 of the 1999 Constitution (as amended), and provisions of the Federal Competition and Consumer Protection Act (FCCPA).
The suit, marked CV/2190/25, was filed by David Ogundipe and Salami Tolulope Ibrahim, who argued that Stanbic IBTC continued to process their personal data for marketing purposes even after they had closed their corporate account with the bank.
According to the claimants, the account was shut following unresolved issues with the bank.
Despite the closure, they alleged that Stanbic IBTC continued sending promotional emails and text messages to their personal and corporate email addresses as well as their telephone numbers.
The customers said their solicitors later wrote to the bank demanding that all marketing communications cease and that their personal data should no longer be processed for promotional purposes.
Although the bank reportedly acknowledged the request and assured them that the messages would stop, the unsolicited communications allegedly continued, prompting them to seek judicial intervention.
In his ruling, Justice Agunloye held that once the banking relationship had ended and the customers had withdrawn their consent, the bank no longer had any lawful basis to process their personal data for marketing activities.
The judge ruled that the continued use of the claimants’ information amounted to an infringement of their constitutional right to privacy and constituted an unfair trade practice under the FCCPA.
The court consequently ordered Stanbic IBTC to delete all personal information relating to the claimants that it is not legally required to retain and to cease every form of data processing except where permitted by law or regulatory obligations.
Justice Agunloye also granted a perpetual injunction restraining the bank, its officers and agents from retaining, processing, transmitting or using the claimants’ personal data for marketing, promotional or any other unauthorised purpose.
While the claimants sought N250 million as damages, the court awarded N15 million as general damages, describing the amount as adequate compensation for the persistent unsolicited communications, the bank’s failure to honour requests for data erasure and the violation of the customers’ privacy rights.
The bank was further ordered to pay N500,000 as the cost of the suit, while the claim for N7 million as litigation expenses was dismissed for lack of sufficient proof.
Justice Agunloye directed that all monetary awards would attract 10 per cent post-judgment interest annually until fully settled.
However, the court declined to order the complete deletion of every record relating to the claimants, holding that banks remain under statutory obligations to retain certain customer records in compliance with financial regulations and anti-money laundering laws.
Reacting to the verdict, counsel to the claimants, O.E. Oluwadamisi of Earnest Attorneys LP, described the decision as a landmark judgment for data protection in Nigeria.
He said the ruling reinforces the mandatory nature of compliance with the Nigeria Data Protection Act and makes it clear that organisations cannot continue processing customers’ personal information after consent has been withdrawn unless authorised by law.
One of the successful claimants, David Ogundipe, welcomed the judgment, saying it represented a victory not only for the litigants but also for millions of Nigerians whose personal information is held by corporate organisations.
He expressed hope that the ruling would encourage institutions across the country to strengthen compliance with data protection laws and place greater respect on customers’ privacy rights.
The number of Bank Verification Numbers (BVNs) on the Nigerian banking industry’s fraud watchlist reached 13,117, according to the Central Bank of Nigeria (CBN).
This is coming as banks strengthen efforts to detect and prevent financial crimes.
According to the CBN’s 2025 Annual Report and Statement of Accounts, the number of BVNs on the banking industry’s fraud watchlist increased from 9,476 in 2024 to 13,117 in 2025. This represents a 38.4 per cent increase.
The apex bank explained that commercial banks, including Access Bank, Zenith Bank, United Bank for Africa (UBA), and other financial institutions, added 3,641 new BVNs to the watchlist during the year.
The report said the increase reflects stronger fraud monitoring, improved compliance, better risk management, and enhanced systems for detecting suspicious transactions.
It added that the higher number does not necessarily mean fraud has increased, but shows banks are becoming more active in identifying and blocking suspicious activities.
The report also revealed that consumer lending declined for the first time since 2019.
Outstanding consumer credit dropped by 19.89 per cent, falling from N4.72 trillion in 2024 to N3.78 trillion in 2025.
The CBN attributed the decline to high interest rates, which made borrowing more expensive for many Nigerians.
Personal loans recorded the biggest drop, falling to N1.85 trillion.
However, retail loans rose by 63.77 per cent to N1.94 trillion, making them the largest category of consumer credit for the first time in several years.
Central Bank of Nigeria (CBN), has ordered banks to refund a total N19.12 billion to customers for illegal deductions and poor complaint handling.
This is coming as bank customers lodged 23,129 complaints against financial institutions in 2025, representing 11 per cent increase over the previous year.
The apex bank also imposed N1.69 billion in penalties on financial institutions for regulatory breaches, poor complaint handling and failure to comply with its directives, according to its 2025 Annual Report.
The CBN attributed the increase in complaints to growing public confidence in its consumer protection framework rather than a deterioration in banking services.
The report stated: “The Bank received a total of 23,129 complaints from consumers of financial services in 2025, a rise of 10.53 per cent above the 20,925 in 2024. The trend reflected increased awareness and improved confidence in the Bank’s consumer complaint resolution process.”
The apex bank added: “A total of 18,824 complaints were resolved, indicating a 9.36 per cent increase over the 17,213 complaints resolved in 2024.”
On the value of disputed transactions, the CBN said: “Total claims in local currency increased to N40.61 billion from N17.13 billion in 2024. Foreign currency claims also rose, reaching $344.2 million compared with $1.06 million in the preceding year.”
According to the report, “Based on the resolved complaints, the sums of N19.12 billion and $329.3 million were refunded in 2025, compared with N9.66 billion and $0.67 million in 2024.”
The CBN said it strengthened enforcement against erring financial institutions during the year.
It stated: “During the review period, the Bank imposed 11 penalties on financial institutions totalling N1.26 billion for infractions ranging from regulatory breaches and failure to respond to regulatory queries.”
The report further disclosed: “In addition, the Bank imposed 21 penalties on financial institutions to the tune of N430 million for infractions ranging from delays in resolving customer complaints to failure to comply with the Bank’s directives.”
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