CBN Moves to Separate Banks from Fintech Subsidiaries, Restricts Use of Customer Funds
The Central Bank of Nigeria (CBN) has unveiled a draft regulatory framework aimed at creating a clear separation between banks and other financial entities under the same corporate group, including financial technology (fintech) companies, in a move designed to strengthen consumer protection and safeguard financial stability.
The proposed guidelines, contained in a circular dated June 10, 2026, and titled “Exposure of the Draft Guidelines on Ring-Fencing Operations of Closely Linked Entities in the Nigerian Financial System,” seek to ensure that related financial institutions operate independently and prevent the misuse of customer funds across affiliated entities.
According to the apex bank, the framework is intended to establish clear operational and functional boundaries among related companies while addressing regulatory loopholes arising from the commingling of activities across different licensing categories.
The CBN said the guidelines prescribe requirements covering governance, intra-group transactions, segregation of customer funds and data, operational independence, recovery and resolution planning, as well as consolidated supervision.
“The Guidelines are intended to strengthen consumer protection, enhance transparency and accountability, mitigate contagion risks among closely linked entities, and preserve financial stability while supporting innovation and fair competition within the financial services sector,” the circular stated.
The draft defines a closely linked entity as an organisation that directly or indirectly controls, is controlled by, or operates under common control with another entity through ownership structures, voting rights, common directors or senior management, shared systems or branding, or contractual dependence.
Under the proposed framework, closely linked entities would be required to maintain separate governance structures, risk management systems, and operational processes. Each entity would also be expected to meet capital adequacy and liquidity requirements independently, regardless of the financial strength of the broader group.
The CBN is also proposing stricter oversight of intra-group transactions. Under the draft rules, no closely linked entity would be permitted to extend loans to, or guarantee the obligations of, another affiliated entity without prior written approval from the regulator.
In addition, all intra-group exposures must be conducted on an arm’s-length basis and reported to the CBN on a quarterly basis.
To strengthen consumer rights, the apex bank said financial institutions would be required to obtain customers’ explicit consent before onboarding them onto products or services offered by affiliated entities. Institutions must also clearly disclose such arrangements in simple language and provide customers with alternative options where available.
A major highlight of the proposed framework is the prohibition of using customer funds to support affiliated businesses. The CBN stated that customer deposits and funds must not be used for intra-group lending, proprietary trading, servicing group debts, or financing the operational expenses of related companies.
The regulator also proposed stricter data protection requirements, stressing that customer information must be stored separately from the data systems of affiliated entities to prevent unauthorised access and the commingling of sensitive information.
“Customer data held by an entity shall be segregated and stored independently from data systems of closely linked entities to prevent unauthorized access or commingling,” the draft guidelines noted.
Furthermore, the CBN said promoters of closely linked financial entities would be required to establish non-operating holding companies (HoldCos) to oversee their investments. However, shareholders unwilling to adopt the structure may choose to merge their businesses and surrender excess licences.
The apex bank has invited stakeholders and members of the public to review the draft guidelines and submit comments no later than July 9, 2026.
The proposal follows another draft framework issued by the CBN on June 10 regarding financial holding companies, which seeks to tighten ownership requirements by mandating a minimum 51 per cent stake in subsidiaries.
The latest move underscores the regulator’s efforts to strengthen oversight of Nigeria’s increasingly interconnected financial sector while ensuring that innovation and financial stability develop side by side.