CBN to Directors: Rebuild Trust, Deliver Stronger Banks

Governor of the Central Bank of Nigeria, Olayemi Cardoso, has charged company directors to take a frontline role in translating Nigeria’s recent banking recapitalisation into stronger, more resilient institutions, warning that the exercise must go beyond expanding balance sheets to rebuilding trust and stability in the financial system.

Speaking at the induction ceremony of new members of the Chartered Institute of Directors Nigeria in Lagos, Cardoso said the country’s financial sector had just concluded a “historic recapitalisation exercise” designed to reinforce resilience, boost investor confidence, and position banks to support sustainable economic growth.

Represented by the director, Banking Supervision, CBN, Dr Olubukola Akinwuni , Cardoso stressed that the post-recapitalisation phase places a heavier burden on directors, whose stewardship, he said, must now focus on consolidation, confidence, and stability.

“Recapitalisation is not an end in itself. The true measure of success lies in whether it delivers stronger institutions, not merely larger balance sheets,” Cardoso said, urging directors to adopt a more active governance role.

The CBN governor noted that stewardship in the current reform cycle demands deliberate actions to guide institutions through economic cycles, ensure transparency and accountability, and embed risk management frameworks capable of withstanding shocks.

According to him, directors must move from passive oversight to active leadership, balancing profitability with sustainability while aligning compliance with innovation.

Cardoso pointed to recurring governance failures in Nigeria’s banking history as a key risk to financial stability, recalling regulatory interventions, including the dissolution of boards and management of three banks in January 2024 over serious breaches.

He also referenced the apex bank’s 2025 directive on succession planning, which requires systemically important banks to obtain regulatory approval for incoming chief executives six months before exit and announce successors three months ahead, a move aimed at preventing leadership gaps.

“These measures underscore a consistent lesson: strong corporate governance is the foundation of trust and stability. Where governance fails, regulatory intervention becomes inevitable,” he said.

The governor explained that recapitalisation has been complemented by a suite of regulatory reforms to strengthen governance and empower boards. These include stricter compliance with insider-related credit limits, enhanced disclosure requirements, fit-and-proper criteria for directors, and mandatory board evaluations.

He added that the transition to Risk-Based Capital Requirements marks a significant shift in regulatory philosophy, where capital adequacy is determined not just by size but by the risk profile of institutions.

Under this framework, he said, directors are expected to ensure strategic capital planning, strengthen risk governance across credit and operational exposures, and enforce accountability without reliance on regulatory forbearance.

“This is a cultural shift. Capital is no longer about volume; it is about alignment with risk and sustainability,” Cardoso stated.

He further emphasised that the responsibility of directors extends beyond the boardroom, particularly at a time when regulatory expectations are tightening, technological disruption is reshaping the industry, and stakeholder confidence remains fragile.

“The Central Bank views directors as critical partners in ensuring that reforms translate into tangible stability. Trust must be rebuilt and sustained through ethical leadership and transparency,” he added.

Cardoso urged the newly inducted directors to see their appointment as a call to national service, noting that decisions taken at board level would have far-reaching implications for Nigeria’s economic trajectory.

He reaffirmed the CBN’s commitment to working with industry stakeholders to build a financial system that is resilient, inclusive, and globally competitive.

“As we advance into this new era, stewardship is not optional—it is the essence of leadership. Together, regulators and directors must ensure that the financial system remains a pillar of strength for sustainable growth,” he said.