A major regulatory overhaul targeting Nigeria’s financial holding companies like Access Holdings Plc, Guaranty Trust Holding Company Plc (GTCO), First Bank Nigeria Holdings Plc, among others, is set to inflate operational expenses as the Central Bank orders an end to centralized compliance and audit teams.
The June 10 exposure draft, which forces subsidiaries to duplicate these roles independently, threatens to bloat payrolls across the groups. As these banking giants scramble to cover the new costs, customers are expected to brace for a cascade of price increases, from higher monthly maintenance fees and transfer charges to tighter interest rates on loans and savings.
The CBN says Holdcos can only provide facilities (offices, security, cleaning), legal services, and ICT to their subsidiaries, and even these require prior written approval. Crucially, risk management, compliance, internal audit, and company secretariat duties are completely removed from the approved list. Each subsidiary must now build and fund these functions independently, with strict “arm’s length” rules and mandatory bi-annual value-for-money audits.
For the banks, the implication is immediate and expensive. Instead of one group compliance officer overseeing the bank, insurance firm, and pension manager, each entity must now hire its own entire department. This means duplicating roles and bloating payrolls. For smaller subsidiaries, like a microfinance bank tucked under a large parent, the cost of maintaining a standalone compliance team could be crippling. The CBN might inadvertently force these groups to sell off or shut down their smaller units, leading to industry consolidation.
For the common man on the street, this may translate directly to higher banking fees. Financial institutions do not absorb extra costs, they pass them on. It is therefore expected that monthly account maintenance fees will rise. Higher charges on transfers, ATM withdrawals, and SMS alerts are prone to skyrocket too. Loan interest rates could creep up, while savings interest might shrink further as lenders scramble to cover their new overheads.
Worse still, if the costs become too heavy for smaller subsidiaries, financial access in rural areas could shrink as these units get divested. The CBN argues the rule is necessary to fix “governance gaps” and stop holdcos from secretly running their subsidiaries. However, for millions of Nigerians just trying to save and transact, the immediate reality of this rule may simply be a leaner wallet and a more expensive banking experience.
