Cardoso Woos Asian Capital, Seeks to Deepen Financial Links, Payment Connectivity

***•***Apex bank steps up enforcement across banking sector, warns against regulatory breaches, reckless offshore investments

James Emejo in Abuja and Nume Ekeghe in Lagos

Governor of Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, yesterday, said the bank was moving to deepen the country’s access to Asian capital, adding that the real test of recent reforms remains whether they can make foreign investment stay, return, and grow.

Cardoso, now on his way to the IMF-World Bank Annual Meetings in Bangkok, made the case for stronger Nigeria-Asia financial ties during a series of high-level engagements in Singapore involving the Monetary Authority of Singapore (MAS), Global Finance and Technology Network (GFTN), and major Nigerian and international financial institutions.

The apex bank also said it had stepped up enforcement across the banking sector, warning that bank directors and major shareholders could face removal where persistent insider credit breaches undermine corporate governance and financial stability.

The warning followed the bank’s earlier directive requiring banks to make 100 per cent provisions for specified insider-related credit exposures over an 18-month period, as part of measures to strengthen capital buffers and safeguard depositors’ funds.

Building New Channels for Investment, Trade, Payments

Cardoso’s engagements, which included the signing of a Memorandum of Understanding (MoU) with GFTN, were aimed at building institutional cooperation, strengthening financial-market infrastructure, and creating new channels for investment, trade, payments, and financial innovation.

Speaking at the Nigeria-Asia Financial Connectivity Dialogue, hosted by J.P. Morgan, in Singapore, Cardoso said Nigeria’s reforms were designed not merely to attract episodic capital inflows but to establish the confidence required for investors to remain committed to the economy.

He said, “The real test of reform is not whether you can attract capital once; it is whether you create the confidence for capital to stay, return and grow.”

The governor said the reforms in the foreign exchange market were intended to eliminate distortions, improve transparency, and provide clearer rules for market participants.

He stressed that monetary stability, sound governance and predictable market rules were essential to transforming Nigeria into a more attractive destination for long-term institutional capital.

According to him, stabilising the financial system should not be viewed as an end in itself but as the foundation for deeper markets, stronger market infrastructure and greater participation by domestic and international investors.

At the Singapore engagements, the CBN delegation held discussions with MAS on financial-sector development, regulation, market connectivity and innovation, with both sides exploring areas for continued institutional cooperation.

According to a statement issued by the bank, the central bank also signed an MoU with GFTN to establish a framework for collaboration on financial innovation, including connections between relevant institutions and innovation ecosystems in Nigeria and Singapore.

The agreement is expected to provide a platform for identifying practical areas of cooperation in financial technology and other emerging areas of the financial system.

CBN Targets Stronger Nigeria-Asia Financial Connectivity

Beyond investment flows, Cardoso said the country’s engagement with Asia was being positioned around broader financial and commercial connectivity, including stronger relationships between Nigerian and Asian banks and financial-market institutions.

He also pointed to opportunities for more efficient payment and settlement channels and increased participation by Nigerians living and working across Asia.

The Nigeria-Asia dialogue brought together investors, financial institutions, businesses and members of the Nigerian diaspora, with discussions focused on Nigeria’s reform trajectory and the implications for capital formation and international market participation.

The panel, moderated by J.P. Morgan’s Chief Economist for Africa, Gbolahan Taiwo, included Group Managing Director/CEO of Nigerian Exchange Group (NGX), Temi Popoola; Group Managing Director/CEO of FMDQ Group, Zeal Akaraiwe; CBN Director of Trade and Exchange, Aderinola Shonekan; and Special Adviser to the Governor on Financial Markets and Economic Policy, Olumayokun Ajibade.

The discussions examined the development of deeper and more liquid Nigerian markets, foreign-exchange confidence, capital formation, and the infrastructure required to sustain international participation.

Cardoso also highlighted financial technology and artificial intelligence as increasingly important to the next phase of financial-sector development, particularly in improving financial services, strengthening risk management, expanding inclusion and enhancing regulatory capacity.

The Singapore engagements formed part of a wider CBN programme of institutional and market outreach across Asia, with the governor and his delegation scheduled for further engagements in Beijing.

Akinwunmi: Insider Lending Could Trigger Fresh Banking Crisis

CBN Director, Banking Supervision, Dr. Olubukola Akinwunmi, at a conference in Abuja, disclosed that the regulator was determined to ensure that the stronger capital base created by the banking sector recapitalisation was not weakened by excessive risk-taking, insider lending, or other prudential breaches.

Insider credit refers to loans granted by banks to their directors, significant shareholders, and related parties.

Such exposures are subject to strict regulatory limits to prevent conflicts of interest, excessive risk-taking, and the misuse of depositors’ funds.

Akinwunmi said, “From the insider credit circular that was released in February 2025, you would have seen that some owners of banks or some shareholders of banks and maybe some of the board members have exited the banking system because the bank is strictly monitoring that.

“We have had occasions where we had to point out to banks, if this insider credit persists, this person can no longer continue to be on the board of your bank, because corporate governance is the bedrock of resilience.

“If there is poor corporate governance, if insider credit pervades the industry, in a short time, we will all live to see a repeat of the problem that we have battled or we have dealt with through recapitalisation. So, a lot of focus is on ensuring that we enforce the rules that used to be observed in breach.”

The disclosure marks a tougher phase of banking supervision, with the CBN moving beyond recapitalisation to enforce more strictly the rules governing how banks lend, invest, and are managed.

CBN Ends Forbearance, Insists Banks Must Follow Rules

Akinwunmi said the current supervisory approach was not necessarily about introducing new restrictions, but about ensuring that existing rules were actually followed.

He said, “The Central Bank of Nigeria, under the leadership of Mr. Olayemi Cardoso, has made it clear to the banking system that we will follow the rules to the letter, and it’s all in the interest of the banking system and its resilience.”

He cited single-obligor limits as one area where banks had previously benefited from regulatory forbearance.

According to him, CBN has now moved to close that avenue as part of efforts to ensure that banks maintain prudent lending structures.

Akinwunmi stated, “As we speak, unlike previous times when it was easier for banks to obtain forbearances over such things, you don’t get that again because we want to ensure banks play strictly by the rules.”

He added that the enforcement drive was necessary because prudential rules were designed to prevent individual exposures from becoming large enough to threaten the stability of an institution.

He stated, “There could have been a lot of information you are getting about what is going on in the banking industry at the moment. But one thing you have to know is that enforcement is at a level, is at an unprecedented level.”

CBN Enforces 10% Cap On Offshore Subsidiary Investments

The banking supervision director also addressed recent developments involving Nigerian banks’ investments in foreign subsidiaries, clarifying that CBN had not introduced a new rule preventing banks from expanding into other African countries.

Rather, he said, the regulator was enforcing an existing requirement under the Banks and Other Financial Institutions Act (BOFIA), which limited the amount banks could invest in offshore subsidiaries.

Akinwunmi stated, “There was no new rule. What simply happened was that we enforced the existing rule because BOFIA already stipulated that a maximum of 10 per cent of share capital shareholders’ funds is what a bank can, you know, invest in foreign or offshore subsidiaries.”

He said the provision had been in existence for years but had not always been strictly enforced.

He said the post-recapitalisation environment had made strict enforcement even more important because banks could not be allowed to deploy fresh capital into investments that could expose them to significant risks outside Nigeria.

“But now, after recapitalisation, we cannot afford to have reckless investment in offshore subsidiaries that may negatively impact our banks,” he said.

Akinwunmi said the regulator’s objective was ultimately to protect the Nigerian banking system and strengthen public confidence.

He said, “And so we said, this has been in our laws to protect the Nigerian banking system. We will enforce it, and we are deliberately enforcing it.”

Risk-based Capital to Link Capital Buffers to Risk-taking

Beyond enforcement of existing prudential rules, Akinwunmi highlighted CBN’s transition towards a risk-based capital requirement framework, which he described as an important development in ensuring that banks maintained capital commensurate with the risks they assumed.

He explained that the objective was to move beyond a system where banks were assessed largely against uniform minimum capital requirements, regardless of differences in their business models and risk profiles.

He said, “It is not just about maintaining a minimum capital requirement. It’s about maintaining a capital requirement that speaks to the level of risk exposure or risk taking that a bank has decided to embark on based on its business model.”

Akinwunmi explained that banks with different risk profiles should not necessarily be expected to hold the same level of capital.

He said, “So, there is a minimum capital requirement for all banks, but there is also a risk-based minimum capital requirement that is dependent on the type of risk and the level of risk that you are exposed to as a result of your business model, as a result of your corporate governance.”

He said the framework meant that risk-taking will increasingly have a direct impact on the amount of capital a bank was required to maintain.