Zenith Bank Under Pressure to Exit CBN Forbearance Scheme by June 30 Amid Regulatory Scrutiny
Zenith Bank Plc, Nigeria’s largest lender by Tier-1 capital, is racing against time to exit the Central Bank of Nigeria’s (CBN) regulatory forbearance framework before the June 30 deadline a development that underscores growing concern over the true financial health of the country’s top banking institutions.
In a statement filed with the Nigerian Exchange Group (NGX) on June 17, Zenith Bank confirmed that it is actively working to bring its lending exposure specifically those exceeding the Central Bank’s Single Obligor Limit (SOL) within regulatory bounds. According to the bank, the breach in question involves a “single obligor,” though the identity of the entity remains undisclosed.
Zenith also acknowledged that only two of its clients were under forbearance-related arrangements. It assured stakeholders that full provisioning would be completed by the end of the month. This move comes amid the CBN’s renewed clampdown on banks operating under regulatory waivers, following concerns that leniency around capital adequacy and exposure limits may be masking deeper structural risks in the financial sector.
“The bank has taken comprehensive steps to ensure full provisioning by 30 June, 2025,” the statement noted, though it did not provide clarity on whether these provisions would impact overall profitability or dividend disbursement.
The CBN had earlier suspended dividend payments for banks under forbearance, further fuelling shareholder anxiety and speculation on the stability of Nigeria’s financial sector.
Lack of Transparency Raises Questions
While Zenith Bank has publicly declared that it has already surpassed the new regulatory capital requirement of ₦500 billion, financial analysts have noted a worrying lack of transparency regarding the underlying credit exposures that necessitated forbearance in the first place. Without clear disclosures, it remains difficult to assess the scale of risk or the credibility of the bank’s remediation efforts.
“Saying the exposure is tied to a ‘single obligor’ is vague and insufficient,” said a financial analyst in Lagos. “Which company or entity is involved? What sector? Is it a politically exposed borrower? The public deserves more than general assurances.”
A Pattern of Superficial Optimism?
Zenith Bank’s statement to investors was filled with optimistic language and a string of corporate accolades. Yet, many observers argue that awards and historical achievements offer little insight into the bank’s current operational risks or internal vulnerabilities especially in a volatile macroeconomic climate marked by rising inflation, currency devaluation, and low consumer confidence.
“Regulatory compliance should not be celebrated it is a baseline requirement,” said one banking regulation expert. “The question isn’t whether Zenith has won awards. It’s whether it has been fully transparent and compliant, particularly in a time when public trust in Nigerian banks is fragile.”
Dividend Promise or Distraction?
In what appeared to be an effort to calm market jitters, Zenith Bank expressed confidence that it would meet shareholder dividend expectations for the 2025 financial year. However, critics argue that dividend declarations should not be the focus when capital adequacy and risk exposure compliance are still under scrutiny.
“The rush to assure shareholders of dividends feels premature, especially when the bank is still working to exit regulatory forbearance,” a corporate governance watchdog stated. “Sustainable banking must prioritize long-term stability over short-term shareholder appeasement.”
CBN’s Tightening Grip
The backdrop to this development is a significantly tougher regulatory environment under the CBN, which is now actively enforcing compliance after years of leniency that allowed banks to exceed lending limits and under-provision for risky loans.
Forbearance, once granted to shield banks from the full impact of large exposures or economic shocks, is no longer viewed as a safety net but as a red flag for mismanagement and poor risk governance. The CBN has made it clear that institutions still dependent on regulatory waivers will face restricted operations, including curbs on dividend payments, expansion plans, and foreign exchange allocations.
The Bigger Picture: A Fragile Financial Sector
Zenith Bank’s situation is symptomatic of a larger problem plaguing Nigerian banking: overexposure to large corporate borrowers many of them politically connected and systemic opacity. Without full disclosure and third-party audits, the public remains in the dark about how widespread these issues are, and whether the supposed financial soundness is more façade than fact.
While Zenith Bank boasts of surpassing the capital threshold, critics insist that sheer capital size is not enough it must be matched with prudent governance, regulatory compliance, and transparent financial disclosures.
Conclusion: A Race Against Reputation Risk
As the June 30 deadline looms, all eyes are on Zenith Bank. Its ability to exit the CBN’s forbearance list is not just a test of financial strength, but of credibility. For Nigeria’s banking sector to thrive in a climate of economic uncertainty, transparency must become the rule, not the exception.
Failure to meet regulatory benchmarks could expose Zenith and others in similar situations to reputational damage that even a wall of awards cannot repair.
Reference
Zenith Bank Under Pressure to Exit CBN Forbearance Scheme by June 30 Amid Regulatory Scrutiny