The Central Bank of Nigeria (CBN) has issued a fresh directive defining how Financial Holding Companies (HoldCos) and their banking subsidiaries must calculate minimum paid-up capital, aiming to end weeks of confusion that contributed to delays in the release of lenders’ financial statements.

In a circular dated November 14, 2025, the CBN said minimum paid-up capital, referenced in Section 7.1 of the 2014 Guidelines for Licensing and Regulation of Financial Holding Companies, must be computed solely as the par value of issued shares plus any share premium arising from their issuance.

The rule, CBN said, takes immediate effect and overrides all prior interpretations used across the industry.

According to the bank, it has noted divergent interpretations of minimum paid-up capital “For the purpose of Section 7.1, minimum paid-up capital shall be the aggregate of the par value of issued shares and any share premium arising from their issuance. All previous interpretations that conflict with this position should be discontinued forthwith.”

Sources familiar with the matter said the clarification became necessary after inconsistencies emerged across banks and HoldCos during regulatory reviews. Some institutions had classified minimum capital narrowly as paid-up capital excluding share premium, while others included reserves, retained earnings, and other equity components, leading to conflicting capital positions.

These discrepancies created friction as banks prepared half-year and nine-month earnings, with several institutions asked to reconcile and revalidate their capital computations before submitting results for regulatory approval. Findings by Daily Sun revealed that this has contributed to delays in financial disclosures that stretched across the sector.

HoldCos were a major focus of the directive. Under existing rules, a holding company must maintain issued share capital greater than the combined capital of all its subsidiaries. This requirement influences dividend approvals, group restructurings, and the upstreaming of profits.

Some HoldCos previously relied on reserves or retained earnings to meet capital thresholds, treatment the CBN has now explicitly ruled out.

By insisting that only issued share capital and share premium qualify toward minimum capital, the regulator is moving to create a uniform and more conservative capital base across financial groups.

Analysts say the new definition may prompt some HoldCos to restructure equity or raise fresh capital to meet the standard.

The timing is significant, arriving as banks work toward the CBN’s new recapitalisation regime, which requires banks to substantially strengthen capital buffers over the next two years. Uniform capital definitions are seen as key to ensuring transparency, comparability, and credibility in capital reporting during the transition. (The Sun)

Update news