MON JUNE 15 2026-theGBJournal|The Central Bank of Nigeria (CBN) has unveiled draft guidelines aimed at ring-fencing the operations of closely linked entities within the financial system.
The move is designed to strengthen financial stability, enhance consumer protection and curb regulatory arbitrage across different licensing categories.
The proposed framework, issued by the apex bank on Sunday, would establish clear operational and functional boundaries among affiliated financial institutions, including holding company structures.
The regulator said the measures are intended to address risks arising from the commingling of activities, customer funds and operational functions across entities operating under separate licences.
Under the draft rules, closely linked entities would be required to maintain independent governance structures, capital and liquidity positions, and operational systems.
The guidelines prescribe requirements covering governance, intra-group transactions, segregation of customer funds and data, operational independence, recovery and resolution planning, and consolidated supervision.
The CBN said the framework is designed to improve transparency and accountability, reduce contagion risks within financial groups and support fair competition and innovation in the financial services sector.
The proposals seek to prevent regulatory arbitrage associated with overlapping activities among entities holding different licences and mitigate risks stemming from the mixing of customer funds, including deposits, investment balances and wallet-based holdings.
The central bank also intends to strengthen governance standards for affiliated institutions and facilitate the orderly resolution of distressed entities within financial groups.
The guidelines would apply to all CBN-licensed institutions. Where a regulated entity is closely linked to a firm supervised by another financial regulator, the CBN said it would collaborate with the relevant authority to extend the framework’s application across the group.
Among the key principles, the draft requires affiliated entities to operate independently, maintain adequate governance arrangements and hold sufficient capital and liquidity resources to function on a standalone basis.
Apart from a parent company’s responsibility to provide capital support to subsidiaries, no entity would be permitted to rely on another group member’s balance sheet for financial support.
The framework also mandates the segregation of customer funds through legally enforceable separateness covenants and requires closely linked entities to establish non-operating holding company structures where applicable.
In addition, the CBN plans to supervise such groups on a consolidated basis to strengthen oversight of risks across affiliated entities.
The proposed rules further stipulate that each regulated institution must independently meet capital adequacy and liquidity requirements regardless of group-wide resources.
Any intra-group liquidity support arrangement would require the prior written approval of the central bank, underscoring the regulator’s push to limit contagion risks and reinforce the resilience of Nigeria’s financial system.
See attached
THE EXPOSURE DRAFT GUIDELINES ON RING-FENCING OPERATIONS OF CLOSELY LINKED ENTITIES
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