The Central Bank of Nigeria's draft guidelines on financial holding company structures, which are open for stakeholder comments until July 9, contain several unaddressed gaps that could produce outcomes running contrary to the regulator's own objectives, according to an analysis by investment banking executive Dele Akintola.
The guidelines direct banking groups to lift their foreign banking subsidiaries out of the Nigerian bank and hold them at the holding company level or through an intermediate holdco. While the intent of improving governance and supervisory visibility is sound, the draft creates three significant structural issues.
The first concerns the international banking licence. The draft assumes the Nigerian bank retains its international authorisation even after foreign subsidiaries have been removed from its balance sheet. Yet an international licence — which requires a minimum capital of N500 billion — exists precisely to authorise offshore operations. Once those operations migrate upward, the Nigerian bank begins to resemble a purely domestic institution, which requires only N200 billion under a national licence.
This means a group that raised capital to meet the N500 billion international minimum could, post-restructuring, hold N300 billion in excess bank-level capital with no clear regulatory guidance on whether a downgrade is appropriate. The draft offers no reconciliation between the licence-tier logic and the capital architecture it mandates.
The second issue involves jurisdiction arbitrage. The draft moves foreign subsidiaries out of the Nigerian bank but says nothing about where the intermediate holdco must be domiciled. Groups could register the intermediate vehicle in jurisdictions such as Mauritius — which offers favourable treaty networks and is a common holding layer for African financial assets. Under such a structure, dollar-denominated profits from African subsidiaries would upstream to the Mauritius vehicle rather than returning to Lagos, adding a structural source of demand for foreign exchange and pressure on the naira at every financial year end.
The third concern relates to succession planning. Under the 2023 Corporate Governance Guidelines, any executive director, deputy managing director, or managing director who moves from a bank to the board of its financial holding company must observe a two-year cooling-off period. By compelling banks to operate as full holdco groups, the draft effectively blocks the natural leadership pipeline — where a bank CEO graduates to group chairman — forcing institutions to choose between less experienced holdco leadership or costly governance workarounds.
The article recommends three specific amendments: explicitly address holdco domicile and the licence-tier question, reconcile the cooling-off rule with the holdco future the draft mandates, and adequately fund supervisory capacity to monitor compliance within these complex group structures.
