UBA Silent Over $280m Exposure As Banks Unveils Exit Plans

No fewer than five commercial banks affected by the recent Central Bank of Nigeria, CBN, forbearance notice have unveiled their plans to exit the problem within the shortest possible time.

Some commercial banks have said they are prepared to exit the window by the end of June 2025.

However, the United Bank for Africa, UBA, is among the bank with high exposure , according to report by Rencap Capital, an emerging and frontier market investment bank, which put the total banking sector exposure at over $3.5 billion.

The report pointed out that a larger part of the banks’ exposure are to the oil and gas sector, noting that some banks could breach their SOL due to their high level of forbearance exposure.

In  the eport, the investment analyst said “In absolute terms, we estimate regulatory forbearance exposures at $304 million, $887 million, $134 million, $296 million, $282 million, and $1.6 billion for Access, FirstHoldco, FCMB, Fidelity Bank, UBA, and Zenith Bank respectively.”

Rencap added “Based on our forbearance exposure estimates, we believe FirstHoldco, Fidelity Bank and Zenith Bank could breach its SOL due to its estimated forbearance exposure.

“While forbearance exposures are not always tied to a single client, we believe they are predominantly concentrated in loans to a major Oil & Gas counterparty (particularly in the upstream and refinery subsectors).”

The Yemi Cardoso-led CBN had on June 13, 2025  implemented a stringent forbearance policy requiring banks under regulatory supervision to halt dividend payments, defer executive bonuses, and suspend foreign investments.

Not all the banks are however affected in the CBN order for compliance, for instance, the Guaranty Trust Company,  GTCO had stated in its FY24 investor call that it has fully exited all forbearance measures.

The CBN directive had sent cold shivers to keen stakeholders particularly investors in the financial sector, with serious effects on the share price of some of the banks during trading at the NGX in the last few days.

Even though the CBN has since made efforts to calm frayed nerves  analysts insist that the move is necessary to strengthen the banks balance sheets and provide financial buffers for them.

Checks indicate that the CBN measure has affected investors’ sentiment, as  United Bank for Africa, UBA, shares dipped by 5.57 percent to close at N32.20 per share; First Holdco dipped by 4.15 percent to close at N25.40 per share, Access Corps shares also dropped by 2.2 percent to N20.05 per share, and Fidelity Bank dipped by 0.55 per cent to close at N18.20 per share

Keen stakeholders insist that the apex bank has good reason to wade in to prevent an imminent explosion in the sector, noting that the CBN timely intervention may have helped in saving banks which have breaches in credit exposure limits and Single Obligor Limits, SOL.

According to Ugodre Obi-Chukwu, a financial analyst the CBN has been very timely and proactive in its role  as a regulator to stabilize the banks balance sheets.

“The CBN has been proactive in managing regulatory forbearance, signaling banks to accelerate their capital-raising efforts. With ongoing financial restructuring, institutions may need to increase capital beyond the N500 billion minimum requirement or reinvest a significant portion of their earnings to stabilize their balance sheets,” Obi-Chukwu stated.

On their part, the commercial bank caught up in the forbearance web have informed the apex bank of their exit plan, even as some of them said the situation is not as bad with them.

In a statement issued by Zenith Bank Plc in response to the CBN directive, the commercial bank assured shareholders and investors of its readiness to satisfy all relevant conditions to exit the CBN’s regulatory forbearance by June 30, 2025.

The bank has also assured shareholders of its preparedness to meet shareholders dividends expectation as planned in the 2025 financial year.

In the statement sent to the Nigeria Exchange Limited, NG, the bank emphasised its strong financial footing, citing its recent success in raising N500 billion recapitalisation as required by the CBN.

Also, Fidelity Bank Plc expressed confidence that its exposures will be fully provisioned or restored to performing status by June 30, 2025, ensuring an  exit from all forbearance arrangements within the first half of the year. The bank said it’s on its way to meeting the regulatory capital requirement as its’ set to raise additional N200 billion through private placement, to strengthen its financial position having already raised N273 billion in its last Public offer and rights issue.

“With the approval of the CBN and shareholders secured, and ongoing regulatory processes nearing completion, we remain well-positioned to meet prevailing requirements and sustain dividend payments,” the bank said in a statement.

According to Access Bank, in a statement issued to the NGX, titled “Re: Central Bank of Nigeria’s Letter On Temporary Suspension of Dividends Payment, Bonuses, and Investment In Foreign Subsidiaries,” the bank said its financial strength is not in question considering that it’s the first bank in the country to meet and exceed the Central Bank of Nigeria’s  N500 billion minimum capital threshold.

Access Bank disclosed that it will continue to ensure adherence to CBN  regulation and “comply with

the apex bank’s directive by June 30, 2025, while maintaining strong capital buffers  and paying dividend to its shareholders.”

“We assure our esteemed shareholders and stakeholders of our commitment to delivering sustainable value in the immediate and long term and thank them for their trust and support over the years,” the bank said in a statement signed by the company Secretary, Sunday Ekwochi.

The Company Secretary, FCMB Group, Funmi Adedibu in a statement, said it has reduced its credit exposure to N207.6 billion from N538.8 billion at at May 31, 2025, apart from making provision for bad loans which has led to over 60 percent reduction in its credit forbearance exposures.

“Once these loans exit the CBN forbearance regime, we anticipate that this would lead to an initial spike in Stage 3 loans to ~11.5per cent of the total loan book which would decline below 10per cent by the end of the financial year, based on anticipated loan book growth,” the bank said.

“The Bank has one (1) additional obligor (classified as a Stage 1 loan since drawdown to date) on the CBN forbearance for Single Obligor Limit (SOL). This Obligor will be brought within SOL limit by September 30th , 2025, following the conversion to equity of a recently concluded N23.1 billion Convertible Loan and audited nine (9) months projected retained earnings.

“The group has already received CBN approval for the capital verification of the Convertible Loan and we are currently processing the other regulatory approvals required. We intend to conclude this process, including downstreaming the capital proceeds to the Bank by the end of July 2025,” the statement added.

First Holdco, the parent company of First Bank Nigeria, FBN said in a statement to the NGX on Thursday that the bank will still go ahead to pay dividends to shareholders as planned, and beyond  despite its loans exposure. The bank said it’s planning to raise more capital in the second half of 2025 to “cure the breach” cause by forbearance exposures to “two customers”.

First Holdo said,  “The SOL breach of our primary subsidiary, First Bank of Nigeria Ltd (“FirstBank” or “the Bank”), is related to two customers with foreign currency loans arising from over 200 per cent currency devaluation in 2023/2024. With the planned completion of the capital raise in the second half of 2025, among other measures, the bank will cure the breach in this regard.

“Furthermore, the Bank’s forborne loans are in respect of syndicated facilities that are industry exposures. The consortium of lenders is working to re-tenor the facilities to align with their cashflows as all the assets are back to active production and generating appreciable revenue. Some also have receivables that are awaiting payment from relevant agencies of government. Syndicate lenders will ensure the processes are concluded within the current financial year.

“Any loan not fully re-tenored will be fully provisioned and exit forbearance. As a well-diversified financial holding Company, FirstHoldCo will sustain its dividend payments in 2025 and beyond as we remain committed to our esteemed stakeholders.”

Meanwhile, the CBN said on Thursday that the forbearance notice is just a routine checks on commercial banks in the country, saying the nation’s banking sector remains strong, adding that the measure was a reminder for banks to transition from  the temporary regulatory support provided for them by the apex bank.

In a statement signed by CBN Acting Director, Corporate Communications, Hakama Sidi Ali, said the measure is in alignment with Nigeria’s long term economic growth of ensuring that commercial banks in the country are fully capitalised before March 31, 2026.

CBN: “The programme, designed to align with Nigeria’s long-term growth ambitions, has already led to significant capital inflows and balance sheet strengthening across the sector. Most banks have either completed or are on track to meet the new capital requirements well before the final implementation deadline of March 31, 2026.

“The measures announced apply only to a limited number of banks. These include temporary restrictions on capital distributions, such as dividends and bonuses, to support retention of internally generated funds and bolster capital adequacy. All affected banks have been formally notified and remain under close supervisory engagement.

“To support a smooth transition, the CBN has allowed limited, time-bound flexibility within the capital framework, consistent with international regulatory norms. Nigeria generally maintains Risk-Based Capital requirements that are significantly more stringent than the global Basel III minimums. “

“For example, Nigerian international banks are required to hold a minimum Tier 1 capital of 11.25 percent of the bank’s risk-weighted assets, nearly double the Basel III benchmark of six percent.

“These adjustments reflect a well-established supervisory process, consistent with global norms. Similar transitional measures have been implemented by regulators in the U.S., Europe, and other major markets as part of post-crisis reform efforts,” the apex bank stated.