Banking
CBN Action Won’t Affect FBN Holdings Asset Quality, Profitability—Fitch
By Dipo Olowookere
Fitch Ratings has disclosed that the removal of the non-executive board members of FBN Holdings Plc and First Bank of Nigeria Limited by the Central Bank of Nigeria (CBN) last month will not have an effect on the group’s asset quality, profitability and capitalisation.
The rating agency made this disclosure in a statement issued last Friday. It, however, noted that the company’s outlook remains negative, reflecting its pre-existing asset quality and capitalisation weaknesses as well as its corporate governance weaknesses highlighted by the CBN.
In the statement, Fitch emphasised that these weaknesses highlighted above could put pressure on the ratings of the financial institution.
Last week, Fitch affirmed the Long-Term Issuer Default Ratings (IDRs) of FBN Holdings Plc and its primary operating subsidiary, First Bank, at ‘B-‘ with a negative outlook.
According to the statement, the “affirmation reflects our view that the impact of the CBN replacement of FBNH and FBN’s boards, the identification of corporate governance failings and the imposition of corrective measures are tolerable at the rating level.”
The agency said it assessed the near-term financial impact of these actions on FBN Holdings and FBN and believe this is tolerable at the rating level, even though the final outcome is uncertain.
“In our view, any remedial actions imposed by the CBN, including a potential reclassification of related-party exposures as impaired, will not have a material effect on the group’s asset quality, profitability and capitalisation,” it stressed.
But Fitch pointed out that “this does not consider any possible additional actions by the CBN, especially if FBN fails to implement the regulator’s corrective measures or if there were any further uncovering of corporate governance irregularities.”
The rating firm said its analysis of FBN Holdings’ profitability metrics typically lag behind those of the other large banks, mainly due to high loan impairment charges.
“In our view, the corrective measures, including higher provisioning on related-party loans or the sale of non-permissible equity investments, would not materially affect profitability in the near term,” it said.
As for its capitalisation, Fitch said it remains weak with a high influence on the ratings. FBN reported a capital adequacy ratio of 16.6 per cent in the first quarter of 2021, excluding interim profits, which provides limited headroom above its 15 per cent minimum regulatory requirement.
In addition, the capitalisation metrics of the group remain vulnerable to asset-quality risks given significant capital encumbrance by unreserved impaired loans, the rating agency said.
It pointed out that the asset quality remains a rating weakness as it reported an improved impaired loan ratio of 7.9 per cent in Q1 2021 versus 7.7 per cent in FY 2020.
However, FBN Holdings reported reserve coverage of 54.5 per cent at Q1 2021 versus 48 per cent at FY 2020, which remains significantly weaker than domestic peers’.
“Our assessment indicates that if the related-party loan highlighted by the CBN were classified as impaired, the ratio would be unlikely to be above 10 per cent (excluding any new impaired loan generation from ordinary business),” it noted.
“Our conversations with FBN Holdings give us to understand there has been no adverse effect from recent events on its funding and liquidity profile, which remains healthy.
“FBN Holdings’ funding profile continues to benefit from a substantial customer deposit base, which provides around 75 per cent of its non-equity funding,” Fitch said.
Recall that on April 29, 2021, the CBN sacked the boards of FBN Holdings and First Bank in the interest of financial stability and minority shareholders.
According to the apex bank, the action was because First Bank replaced its CEO without prior notice or approval of the regulator, which the CBN said could send the wrong signal to observers.
By Adedapo Adesanya
The operating licences of Aso Savings and Loans Plc and Union Homes Savings and Loans Plc have been revoked by the Central Bank of Nigeria (CBN) as part of efforts to strengthen the mortgage sub-sector and enforce compliance with banking regulations.
Mortgage banks are financial institutions that provide home loans and other housing finance products, and so, they are strictly regulated by the CBN to protect customers and ensure the stability of Nigeria’s financial system.
According to a post by the Acting Director of Corporate Communications of CBN, Mrs Hakama Ali, on the apex bank’s X handle on Tuesday, the affected institutions were accused of violating several provisions of the Banks and Other Financial Institutions Act (BOFIA) 2020 and the Revised Guidelines for Mortgage Banks in Nigeria.
The revocation is part of the central bank’s ongoing efforts to maintain a safe and reliable banking sector, protect customers’ deposits, and ensure that only financially sound institutions operate in the mortgage market.
“The breaches included failure to meet the minimum paid-up share capital requirement, insufficient assets to meet liabilities, being critically undercapitalised with a capital adequacy ratio below the prudential minimum, and non-compliance with directives issued by the CBN,” the post noted.
The CBN emphasised that the revocation aligns with its mandate to ensure financial system stability and maintain public confidence in the banking sector, assuring it is committed to promoting a sound and resilient financial system in Nigeria.
By Adedapo Adesanya
A five-member panel of the Supreme Court, led by Justice Lawal Garba, last Friday ruled in favour of Fidelity Bank in its appeal against Sagecom Concepts Limited.
The judgment brings definitive closure to a legacy case that has attracted attention across the financial sector for more than two decades. It also marks a significant victory for Fidelity Bank in a long-running legal dispute.
In a motion dated October 8, 2025, Fidelity Bank sought clarification from the Supreme Court, requesting a consequential order that the judgment debt be paid in Naira. The bank also asked that the interest rate be set at 19.5 per cent per annum rather than 19.5 per cent compounded daily.
It also requested the exchange rate used for conversion be the rate applicable as of the date of the High Court judgment, in line with the Supreme Court’s decision in Anibaba v. Dana Airlines.
Fidelity Bank further requested the judgment debt be fixed at N30,197,286,603.13 and that interest on this amount be payable at 19.5 per cent per annum until full settlement.
In the judgment delivered by Justice Adamu Jauro, the apex court granted the bank’s first three prayers but declined the fourth and fifth. As a result, the judgment sum will be paid in Naira at an annual interest rate of 19.5 per cent, rather than the daily compounded rate previously awarded by the High Court.
The Supreme Court equally affirmed that the applicable exchange rate should be the rate as of the date of the High Court judgment, consistent with its earlier decision in Anibaba v. Dana Airlines.
The dispute originated from a legacy transaction involving the former FSB International Bank, which merged with Fidelity Bank in 2005. It stemmed from a 2002 credit facility extended to G. Cappa Plc and subsequent legal proceedings tied to the collateral.
This ruling provides finality for years of litigation and confirms a significantly lower liability than the N225 billion previously speculated in the review of decisions leading up to the decision.
By Adedapo Adesanya
The operating licences of all legacy Bureau De Change (BDC) operators who failed to meet the new licensing requirements have been revoked by the Central Bank of Nigeria (CBN).
This happened after the central bank streamlined the BDCs to 82 in order to sanitise the foreign exchange (FX) market in the country.
The latest development was revealed by the apex bank in its Frequently Asked Questions document on the current reform of the bureau de change, published on its website on Tuesday.
According to the document, the CBN has now enforced the final cutoff, declaring that any BDC that did not meet the requirements by the end of November is no longer recognised.
“The guidelines provided a transition timeline of six months from the effective date, 3 June 2024, with a deadline of 3 December 2024, for all existing BDCs to meet the requirement of the new Guidelines or lose their licence(s). However, the management of the CBN graciously extended this deadline by another six months, which ended 3 June 2025, to give ample time for as many legacy BDCs desirous of meeting the new requirements to do so.
“Consequently, any legacy BDC that failed to meet the requirements of the new Guidelines as of 30 November 2025 has ceased to be a BDC, as its licence no longer exists. Please visit the CBN website for the updated list of existing BDCs in Nigeria,” the apex bank said.
According to the CBN, before its latest decision, an extended compliance window was granted under the revised BDC Guidelines. Existing operators were initially given six months, June 3 to December 3, 2024, to satisfy the new regulatory conditions.
The CBN later granted an additional six-month extension, which elapsed on June 3, 2025, to allow more operators to align with the updated standards.
The new measures form part of broader efforts by the CBN to strengthen transparency, compliance, and stability within Nigeria’s foreign exchange market.
The new CBN regulatory framework for BDCs, introduced in February 2024, mandated BDC operators to meet higher capital requirements. Tier-1 operators are required to meet a minimum capital requirement of N2bn, while Tier-2 operators must meet N500m as MCR.
The bank added that it would continue to receive applications on its Licensing, Approval and Requests Portal from prospective promoters, and those that meet the criteria will be considered for a license.
However, the CBN said it reserves the right to discontinue the licensing of BDCs at any time.
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