Strengthen Governance or Face Sanctions – CBN Gov Warns Bank Directors

Governor of the Central Bank of Nigeria (CBN), Mr Olayemi Cardoso, has cautioned bank directors and industry leaders to reinforce corporate governance or risk firm regulatory sanctions, stressing that “strong governance is the foundation of trust and stability in the financial system.”

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

He noted that the success of the recently concluded bank recapitalisation exercise would largely depend on the quality of leadership and oversight provided by directors.

According to him, the exercise was not merely a regulatory obligation but a strategic move aimed at strengthening resilience, boosting investor confidence, and positioning financial institutions to support sustainable economic growth.

However, he emphasised that recapitalisation alone is insufficient.

“As we enter this new phase, the role of directors becomes even more critical.

Stewardship must now be exercised with sharper focus on consolidation, confidence, and stability,” he said.

Cardoso warned that the apex bank would take decisive action against institutions with weak governance structures.

He pointed out that Nigeria’s banking system has faced repeated challenges due to corporate governance failures, noting that regulatory intervention becomes necessary to protect depositors and the broader economy when governance breaks down.

He referenced recent actions by the CBN, including the dissolution of the boards and management of three banks in January 2024 over serious governance lapses and regulatory breaches, underscoring the Bank’s zero tolerance for infractions.

The CBN governor further stated that the evolving regulatory environment demands a higher level of discipline from directors.

He called for proactive leadership that balances profitability with sustainability, while ensuring compliance alongside innovation.

On policy direction, Cardoso highlighted the introduction of Risk-Based Capital Requirements, describing it as a significant shift in the financial system.

He explained that capital adequacy is no longer determined by size alone but by how well it aligns with risk exposure.

He urged directors to prioritise strategic oversight by strengthening frameworks for credit, market, and operational risks, and to take full responsibility for compliance without relying on regulatory leniency.

Cardoso also declared an end to regulatory forbearance, signalling stricter enforcement of capital adequacy standards.

He noted that institutions must now align their capital with their risk profiles to ensure long-term resilience.

“These measures are not punitive; they are enabling. They provide directors with the framework to exercise stewardship with discipline, foresight, and confidence,” he added.