CBN takes action against Nigerian banks supporting unlicensed foreign companies

According to the ‘Guidelines for the regulation of representative offices of foreign banks in Nigeria’ signed by the Director of the Financial Policy and Regulation Department, Muhammad Musa, the Central Bank of Nigeria has announced that it intends to penalize banks that assist unlicensed foreign firms. The statement was made on Monday.

‘Any CBN regulated entity found to be assisting, supporting, harboring or facilitating the presence and/or operations of an unlicensed international financial institution in Nigeria shall be liable to severe sanctions including suspension or revocation of their banking license,” it stated.

As per the guidelines, the representative offices established by foreign banks played a crucial role in promoting the brand and services of their parent company. Additionally, it served as a medium to facilitate foreign direct investment by providing access to diverse investment opportunities in the host country.

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“It is in view of these that the Central Bank of Nigeria issues this guideline to specify the requirements for the licensing and operations of approved representative offices of foreign banks in Nigeria,” it stated.

The guidelines outlined by the CBN apply to a wide range of financial institutions. This includes banks licensed under foreign law that have their registered headquarters outside of Nigeria, as well as any financial institution whose primary business involves accepting deposits, granting loans, and providing current and savings accounts.

The guidelines also cover foreign-owned operating banks and financial holding companies based outside of Nigeria and have controlling interests in one or more banks or institutions that offer similar services. These guidelines aim to promote the brand and benefits of the parent company while also providing investment opportunities in the host country.