The Provisions of the 2023 CBN Guidelines For Representative Offices of Foreign Banks in Nigeria
The Central Bank of Nigeria (CBN) formally launched its guidelines for the representative offices of foreign banks in Nigeria on the 3rd of May,2023(a topic which i wrote about earlier in another article).
This article will be looking at the provisions of these guidelines ranging from applicability to definition of terms to the permissible and non-permissible activities of foreign bank representative offices in Nigeria.
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What is the scope and applicability of these guidelines?
The guidelines apply to:-
– A bank licensed under any foreign law, whose registered office is outside Nigeria.
– Any Financial Institution licensed under foreign law, whose primary business includes the receipt of deposits, granting of loans and/or provision of current and savings account services.
– Any foreign-owned operating bank/financial holding company that is foreign-based, that owns controlling interest in one or more banks or institutions whose primary business includes the receipt of deposits, granting of loans and provision of current & savings account services.
Are the guidelines meant to operate in a stand-alone regulation capacity?
No they’re not. The guidelines shall be read in conjunction with the CBN Act, the Banks and Other Financial Institutions Act (BOFIA), other subsidiary legislations made under the act as well as written directives, notices, circulars, frameworks and other guidelines that the CBN & other regulators in the financial services sector have issued or may issue from time to time.
What exactly is a representative office as defined by the guidelines?
A representative office of a foreign bank is defined by the guidelines as :-
– A liaison office of the foreign bank licensed by the CBN whose sole object is to market the products and services of its foreign parent as well as serve as a liaison between its foreign parent and local banks, an affiliate of the foreign parent, other Financial Institutions, private companies and the general public.
Are representative offices allowed under the guidelines to carry out banking businesses or any other regulated activity in Nigeria under the guidelines?
No, they are not. The CBN guidelines expressly bar this from happening.
What are the permissible and non-permissible activities of representative offices in Nigeria?
Permissible Activities
– Carrying out research activities in Nigeria on behalf of the foreign parent.
– Connecting banks and OFIs in Nigeria to its foreign parent.
– Pursuing business opportunities for the foreign parent or affiliated institutions regarding the availing and/or syndication of foreign currency-denominated loans.
– Marketing the products and services of its foreign parent or an affiliate of the foreign parent licensed and domiciled outside Nigeria.
Non-Permissible Activities
– The provision of services designated in Nigeria as banking business.
– The provision of any commercial or trading activity that may lead to the issuance of invoices for services rendered.
– Engaging directly in any financial transactions save for those falling under the permissible activities classification for representative offices.
What are the basic licensing requirements for representative offices in Nigeria?
You need to consult your lawyer on this as the requirements for representative office registration in Nigeria are somewhat lengthy, although the financial requirements for registration include :-
– A non-refundable application fee of 5 Million Naira.
– A licensing fee of 10 Million Naira.