Foreign banks operating in Nigeria are no longer permitted to accept deposits domestically, according to the Central Bank of Nigeria (CBN).
The CBN Director of Financial Policy & Regulation Department, Chibuzo Efobi, signed a final directive issued by the apex bank yesterday that stated licensed foreign operators would not be permitted to offer services classified in Nigeria as banking business, including deposit collection and funds transfer.
Licensed operators are not permitted to engage in commercial or trading activity that could result in the production of bills for services given, according to the regulations titled “Regulation of Representative Offices of Foreign Banks in Nigeria.”
They are also forbidden from taking orders from the foreign parent on their behalf and from dealing with money directly.
The top bank gave instructions for foreign bank representative offices to play a crucial role in promoting the name and products of their parent company. By connecting funds to different investment opportunities, they are also required to promote foreign direct investment into the host nation.
According to the CBN guidelines, representative offices in Nigeria must pay an application fee of N5 million and a license charge of N10 million, for a total of N15 million, in order to be approved.
The CBN stated that a Representative Office shall only use the parent’s name in its papers and correspondences, including office signage, letterheads, and business cards, along with the designation “representative office.”
“A Representative Office shall obtain the CBN’s prior clearance for employment of its prospective employees and top Management staff. A Representative Office shall inform the Bank of its proposed hours of business. No Representative Office shall be relocated or closed without the prior written approval of the Bank,” it said.
The top bank claims that exhibiting the name and services of the parent company is a key function of representative offices of international banks.
By linking funds to different investment opportunities, it can also encourage foreign direct investment into the host nation, but these opportunities must be governed by CBN laws, it stated.
Regarding the authority to supervise, the CBN stated that it would have complete, unrestricted, prompt access to all internal systems, documents, reports, records, personnel, and property of the representative office and would be able to exercise any authority it may deem necessary.
“The CBN may cause an examination of the operations and affairs of the representative office to be made by its officers or such other duly qualified person as it may appoint, to assess whether the representative office is complying with the banking laws and any guidelines or instructions issued by the Bank,” it said.
The regulator states that the examination of a Representative Office will be conducted on a periodic basis and based on risk; it will include, but not be limited to, a review of the activities conducted, a general assessment of its management and supervision, a review of whether the office is complying with applicable laws and regulations, including any conditions placed on its operations or activities as part of the CBN’s approval of its establishment, and a review of whether the office is following any special procedures.