CBN Signs MoUs with Host Countries to Regulate Nigerian Banks’ Subsidiaries Abroad

The Central Bank of Nigeria (CBN) has formalized partnerships with countries hosting Nigerian banks’ subsidiaries by signing Memoranda of Understanding (MoUs) to bolster regulatory coordination and ensure the safe and compliant operation of these institutions both locally and internationally.

This was disclosed in a statement issued by Mrs. Hakama Sidi-Ali, the Acting Director of Corporate Communications, on Tuesday, further underlining CBN’s commitment to fostering stable financial institutions beyond Nigerian shores.

The MoUs, according to Sidi-Ali, are designed to enhance regulatory collaboration between the CBN and foreign regulators, thereby enabling robust oversight of Nigerian banks operating abroad. This ensures that these subsidiaries adhere to international banking standards, safeguarding their stability and the funds of depositors both at home and abroad.

This measure also aligns with the CBN’s broader mandate to support the stability and soundness of the Nigerian banking sector, which has seen significant expansion across Africa and beyond.

The partnerships come at a critical time, as Nigerian banks continue to play a pivotal role in the financial sectors of numerous African countries and other regions around the world. The CBN’s approach signals its intention to not only maintain stringent control over domestic financial operations but also to regulate the international operations of Nigerian banks, which have expanded rapidly into new territories.

The CBN’s statement reiterated its dedication to upholding stability in the financial system, a fundamental responsibility given the sector’s central role in the broader economy. It highlighted ongoing efforts to ensure deposit security, citing initiatives such as regular stress testing of banks, the deployment of early warning systems, and the adoption of risk-based supervision to anticipate potential vulnerabilities.

“The Central Bank of Nigeria (CBN) wishes to reassure the public of its unwavering commitment to ensuring the stability and reliability of the Nigerian financial system,” the statement read. “The CBN recognizes the crucial role that confidence plays in banking operations and wants to affirm that all deposits in Nigerian banks are secure.”

This proactive regulatory stance is particularly important as global economic uncertainties persist, and Nigerian banks increasingly expand their presence across new markets, both within Africa and globally.

Nigerian Banks’ Growing International Presence

The rapid expansion of Nigerian banks into other African countries and beyond has positioned them as influential players in the global financial industry. Leading banks like First Bank of Nigeria, Zenith Bank, Access Bank, and United Bank for Africa (UBA) operate subsidiaries in multiple countries, enhancing their reach and influence.

For instance, First Bank of Nigeria has subsidiaries in the Republic of Congo, Ghana, The Gambia, Guinea, Sierra Leone, and Senegal, while Zenith Bank operates in Ghana, Sierra Leone, The Gambia, and South Africa. Access Bank Plc, which has made significant strides in expanding its operations, is present in the Democratic Republic of Congo, Ghana, Kenya, Rwanda, South Africa, and the United Kingdom, among others.

Meanwhile, UBA operates in countries like Benin, Burkina Faso, Cameroon, Ivory Coast, Kenya, and Uganda, covering a substantial portion of Africa’s financial markets.

In a recent development, Access Bank announced the acquisition of a license to establish a subsidiary in Namibia. This expansion adds to its existing footprint in Southern Africa, where the bank already operates in Angola, Botswana, Mozambique, South Africa, and Zambia. The bank’s CEO, Roosevelt Ogbonna, described this expansion as a crucial step in bolstering intra-African trade and fostering a robust banking network across Southern Africa, positioning the bank as a key player in the region’s financial market.

The Role of Nigerian Banks in Africa’s Financial Sector

Nigerian banks, particularly Tier-1 institutions, have been noted for their significant role in shaping Africa’s financial services industry. With their subsidiaries spread across the continent, these banks have contributed to deepening financial inclusion, supporting local economies, and promoting trade. For example, the President of Congo recently remarked that four major commercial banks in the country are owned by Nigerians, underscoring the influence of Nigeria’s banking sector in the wider African context.

This influence also highlights the importance of CBN’s MoUs with countries hosting Nigerian bank subsidiaries. As these banks expand, regulatory coordination becomes vital to ensure that their operations are secure, transparent, and compliant with both local and international banking regulations. This will not only protect the interests of depositors and stakeholders but also foster confidence in Nigeria’s growing international banking presence.

With the MoUs in place, the CBN aims to ensure that these banks operate within well-regulated environments that support long-term financial stability.