Foreign Banks to pay Nigerian credit outpost as the Central Bank of Nigeria (CBN) stated that any foreign bank willing to take part in providing loans to Nigerian businesses in dollars must pay a N5 million non-refundable application fee and a N10 million non-refundable licence cost.
The foreign banks that are taking part are those with international headquarters.
The directive stated that the policy is consistent with the CBN’s responsibility to uphold the stability of the financial system and was provided by the director of the financial policy and regulation department, Muhammad Musa, as part of “the Guidelines for the Regulation of Foreign Bank Representative Offices in Nigeria”.
The bank cited Sections 6(1) and 8(1) of the Banks and Other Financial Institutions Act 2020 (BOFIA), which state that “no foreign bank shall operate in Nigeria without the prior approval of the CBN,” and explained that these provisions applied to any bank licensed under any foreign law with its registered head office outside of Nigeria as well as any financial institution licensed under any foreign law whose primary business includes accepting deposits and making loans.
The rule applied to any operating foreign-based, foreign-owned bank or financial holding company that holds a controlling interest in one or more banks or institutions whose primary activity is the provision of current and savings accounts, the acceptance of deposits, or the making of loans.
Additionally, the CBN permitted the banks to advertise the goods and services of their overseas parent or a subsidiary of the foreign parent that is authorized and based outside of Nigeria.
According to the guidelines, these organizations may also conduct research in Nigeria on behalf of the foreign parent and act as a point of contact for the foreign parent with local banks, private institutions in Nigeria, and other foreign parent clients based there.
From this point forward, banks are permitted to link banks and other financial institutions to their parent business and give Nigerian exporters information about the laws and markets of target nations where the overseas parent or any of the Group’s affiliates has a subsidiary.
In addition to helping Nigerian exporters find new markets through the parent company’s international offices, the banks are authorized to connect exporters with potential consumers in nations where the parent company conducts business.
The CBN stated that a memorandum of understanding (MOU) between the CBN and the applicant’s home regulatory supervisor is necessary for the establishment of a representative office in Nigeria.
It further stated that in cases where there isn’t an MOU, the CBN will collaborate with the national regulatory body to create/implement one as quickly as practicable.
It also stated: “Not later than three months after obtaining the Approval-In-Principle, the promoters of a proposed office shall apply for the grant of a final license to the CBN.”
However, the policy specifies that banks are not allowed to conduct banking operations in Nigeria or to engage in any commercial or trade activity that could lead to the issuance of invoices for the services provided.
