Improve oversight or risk enforcement measures, Central Bank cautions Board Members

The Governor of the Central Bank of Nigeria, Mr. Olayemi Cardoso, has cautioned bank directors and industry leaders to bolster corporate governance, warning that failure to do so will prompt decisive regulatory action, as he believes that robust governance is essential for trust and stability in the financial system.

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Cardoso delivered this warning in a keynote address at the Chartered Institute of Directors induction ceremony in Lagos, where he was represented by the Director, Banking Supervision, CBN, Dr. Olubukola Akinwunmi.

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The success of the recently concluded bank recapitalisation exercise, according to Cardoso, will largely depend on the quality of leadership and oversight provided by directors, stressing that Nigeria's financial sector has just completed a historic recapitalisation exercise.

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This reform, he noted, was not simply a regulatory requirement, but a strategic imperative to strengthen resilience, enhance investor confidence, and ensure that institutions are positioned to support sustainable economic growth.

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Cardoso, however, cautioned that recapitalisation alone is not sufficient, adding that as the sector enters a new phase, the role of directors becomes even more critical, with a sharper focus on consolidation, confidence, and stability.

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Highlighting the consequences of weak governance, Cardoso said the apex bank would not hesitate to act where necessary, recalling that over the years, Nigeria's banking system has been repeatedly tested by failures of corporate governance.

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He noted that where governance fails, the regulator must act to safeguard depositors and the economy, citing the CBN's recent interventions, including the dissolution of the boards and management of three banks in January 2024 due to serious governance lapses and regulatory breaches.

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Such actions, he stressed, underscore the Bank's zero tolerance for infractions, and the new regulatory regime would demand higher levels of discipline from directors, requiring them to be active stewards who balance profitability with sustainability and compliance with innovation.

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The adoption of Risk-Based Capital Requirements, according to Cardoso, represents a cultural shift in the financial system, where capital adequacy is no longer about size alone, but about risk alignment.

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For directors, this means strategic oversight, ensuring capital planning anticipates both current and emerging risks, strengthening frameworks for credit, market, and operational risk, and taking responsibility for compliance without reliance on regulatory forbearance.

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Cardoso emphasised that the apex bank has ended regulatory leniency, marking a decisive shift towards stricter compliance with capital adequacy standards, and institutions must now align capital with their risk profile to ensure resilience.

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Reinforcing his warning, he said that these measures are not punitive, but enabling, providing directors with the framework to exercise stewardship with discipline, foresight, and confidence.