Shareholders of Zenith Bank have voiced growing concern over the rising wave of penalties imposed on commercial banks by regulatory authorities, particularly the Central Bank of Nigeria (CBN). They argue that the mounting fines are eroding returns and threatening the long-term sustainability of investments in the banking sector.
At the heart of the discontent is the belief that these penalties, though aimed at enforcing compliance, are ultimately passed on to shareholders—dampening dividend growth and reducing shareholder value. Zenith Bank, for instance, paid out a total dividend of N5.00 per share for the 2024 financial year, amounting to N195.67 billion. While this represents a strong performance, investors say the figure could have been higher in the absence of regulatory penalties.
Escalating Fines Across the Banking Sector
Zenith Bank incurred a staggering N15.422 billion in penalties in 2024 alone, a sharp rise from just N21 million in 2023. The fines stemmed from infractions including anti-money laundering (AML) compliance issues, foreign exchange violations, and other regulatory breaches.
Other leading banks have also felt the pinch:
- Access Bank Group paid N1.21 billion in 2024, up from N38 million the year before.
- GTBank faced N1.6 billion in penalties, compared to N73 million in 2023.
- UBA saw its penalties rise to N400 million from N110 million.
- Sterling Bank was fined N61 million, up from N21 million.
These rising penalties come alongside increasing tax obligations. In 2024, the federal government collected N1.2 trillion in taxes from just nine Nigerian banks—marking a 111.4% increase from 2023. This is despite the banks paying N951.4 billion in dividends to shareholders, an 87% increase year-on-year.
Windfall Taxes Add to Financial Pressures
Compounding the financial strain is the introduction of windfall tax liabilities under the Finance (Amendment) Act 2023, targeting profits from foreign exchange transactions. In 2024 alone:
- Zenith Bank paid N63.3 billion,
- GTCO incurred N51.2 billion,
- UBA was charged N57.9 billion.
These tax burdens, combined with regulatory fines, have intensified shareholder anxiety over reduced returns and a tougher operating environment for banks.
Why the CBN Fines Banks
The CBN maintains that its enforcement actions are necessary to uphold discipline and protect the financial system. Common infractions include:
- Breaches of AML and counter-terrorism financing (CTF) rules.
- Non-compliance with the Cash Reserve Requirement (CRR).
- Irregularities in foreign exchange transactions.
- Lapses in customer protection, reporting standards, or cybersecurity.
These regulations, the CBN argues, are critical for systemic stability and transparency in banking operations.
Shareholders Speak Out
During Zenith Bank’s 2025 Annual General Meeting, several shareholders openly criticized the regulatory penalty regime.
“The penalties are too high. The CBN should issue warnings before imposing fines,” said Otunba Muktar. “Penalizing banks for every minor infraction is harsh and unfair.”
Dr. Farouk Umar described the financial pressures as "unbearable," citing overlapping taxes and levies. “We pay corporate tax, withholding tax, education tax, and now windfall taxes. It’s too much for businesses and shareholders to bear.”
Okezie Boniface pointed to Zenith Bank’s N15 billion penalty as a drag on dividend payouts. “If not for this, our dividend would have gone above N5 per share,” he lamented.
Bank Leadership Responds
Zenith Bank’s Group Managing Director/CEO, Dr. Adaora Umeoji, acknowledged the challenges posed by regulatory fines. She assured stakeholders that the bank is actively implementing stronger compliance measures to minimize future infractions.
“The fines are regulatory, and the CBN has increased its monitoring. We are committed to aligning our operations with these standards to safeguard shareholder value,” she said.
Experts Urge Proactive Compliance
Financial analysts have advised banks to strengthen their internal controls to prevent avoidable infractions. Investment expert Abiodun Adedotun warned that repeat penalties could scare off investors.
“If your bank continues incurring such huge penalties year after year, you just have to exit as a shareholder,” he remarked.
While most stakeholders agree on the importance of regulatory discipline, they stress the need for proportionality and fairness. The growing call is for regulatory agencies to work collaboratively with banks to improve compliance, while avoiding punitive measures that could weaken the sector’s growth prospects.
As discussions unfold, it remains critical for policymakers and regulators to strike a balance that supports both financial system integrity and investor confidence in Nigeria’s banking industry.