Zenith, FirstBank, Access Banks Lead $3.52bn Forbearance Exposure

A recent report by Renaissance Capital Africa has revealed that six Nigerian banks collectively hold approximately $3.52 billion in loans under regulatory forbearance.

This development follows the Central Bank of Nigeria’s directive urging affected lenders to suspend dividend payments and strengthen their capital bases.

Related News:

• First HoldCo, FCMB Stand Firm on Dividends Amid CBN Forbearance
• Zenith Bank Targets Exit from CBN Forbearance Regime by End of June
• Experts Support CBN’s Dividend Freeze to Strengthen Bank Capital

According to the report, titled “Nigerian Banks: Cash is King”, Zenith Bank, FirstBank, and Access Bank account for the largest portions of the total forbearance exposure. These institutions, alongside others, are required to pause dividends, executive bonuses, and offshore investments until they exit forbearance and meet the required capital adequacy and provisioning standards.

The CBN’s directive is part of its broader financial stability and recapitalisation framework, which aims to fortify Nigeria’s banking sector. Banks operating under the regulatory forbearance regime are expected to retain more earnings internally and reinforce their balance sheets.

Renaissance Capital provided estimates indicating that Zenith Bank holds the highest exposure at around $1.6 billion, followed by FirstHoldCo with $887 million and AccessCorp with $304 million. Other banks on the list include FCMB Group ($134 million), Fidelity Bank ($296 million), and United Bank for Africa (UBA) with $282 million.

In terms of exposure as a percentage of gross loan books, Renaissance estimates place Zenith at 23%, FirstBank at 14%, and Access at 4%. Among tier-II lenders, Fidelity Bank and FCMB are estimated at 10% and 8% respectively. Stanbic IBTC and GTCO are reportedly free from forbearance exposures, with GTCO having fully provisioned and written off its prior exposures last year.

The firm noted that some of these forbearance loans may involve breaches of the CBN’s Single Obligor Limit (SOL), particularly for institutions like Zenith, Fidelity, and FirstHoldCo. However, it clarified that not all forbearance exposures are tied to individual obligors. Much of the exposure is believed to stem from loans to major players in the oil and gas sector, especially in upstream and refining operations.

Renaissance Capital also shared that FCMB remains compliant with its SOL, stating that the bank’s largest loan to a single client stands at $68.1 million—well within its $94 million SOL threshold.

The report was released against the backdrop of a broad sell-off in the Nigerian stock market, triggered by investor concerns over the CBN’s new capital retention rules. Banking stocks faced significant pressure at the start of the trading week, though analysts suggest that the dip could present an opportunity for value investors.

Despite the regulatory headwinds, Renaissance Capital maintained a ‘hold’ rating for FirstHoldCo, AccessCorp, UBA, and Zenith Bank, while assigning a ‘buy’ rating to GTCO, reflecting confidence in its current financial position and growth prospects.