Nigeria’s leading financial holding companies, including Access Holdings, Guaranty Trust Holding Company (GTCO), and First Holdco, are facing a significant increase in operating expenses following a new regulatory proposal by the Central Bank of Nigeria (CBN) that restricts the use of shared services across subsidiaries.
Under the exposure draft released on June 10, the apex bank seeks to limit the services that holding companies can centrally provide to subsidiary businesses. The proposal removes key functions such as compliance, risk management, internal audit, and company secretariat services from the list of activities that can be shared across a group structure, requiring each subsidiary to establish and manage those functions independently.
The proposed framework is designed to strengthen corporate governance, improve regulatory oversight, and ensure that subsidiaries operate with greater independence. According to Brandspur Banking News Desk, the policy would permit holding companies to provide only selected support services, including office facilities, security, cleaning, legal services, and information technology support, subject to prior regulatory approval.
If implemented, the new requirements could substantially increase personnel and administrative costs across Nigeria’s banking groups. Subsidiaries operating under financial holding companies would be required to recruit dedicated compliance, audit, and risk management teams instead of relying on centralised group structures that currently serve multiple entities.
Industry observers note that the changes could have a particularly strong impact on smaller subsidiaries, including microfinance institutions, insurance businesses, and pension operators within larger financial groups. Maintaining separate governance and control functions may place additional financial pressure on these businesses and could influence future restructuring decisions within the sector.
The proposal also introduces stricter arm’s-length requirements for services provided between holding companies and subsidiaries. In addition, financial groups would be expected to conduct regular value-for-money assessments to ensure that approved shared services remain transparent and commercially justified.
For customers, the development has raised concerns about the potential impact on banking costs. Higher operating expenses could place pressure on financial institutions to review service charges, lending rates, and other fee-based products as they adjust to the new regulatory environment. However, the final impact will depend on how individual institutions respond and whether the proposed rules are adopted in their current form.
The latest CBN move reflects broader efforts to strengthen governance standards within Nigeria’s financial system as regulators seek to reduce operational risks and enhance accountability across increasingly complex financial groups. The proposal remains subject to industry review and stakeholder feedback before any final implementation decision is announced.
