The Central Bank of Nigeria (CBN) has issued guidelines regulating the activities of foreign banks’ representative offices in the country.
In a circular directed to all banks and Other Financial Institutions (OFIs), the CBN stated that representative offices of foreign banks licensed in Nigeria are not allowed to engage in various financial services, including those classified as banking business.
The approved representative offices of foreign banks are only permitted to market the products and services of their foreign parent and act as a liaison between the foreign parent and local banks, an affiliate of the foreign parent, other financial institutions, private companies, and the general public.
The CBN also noted that representative offices can help showcase the brand and services of their parent company, promote foreign direct investment in Nigeria, and provide assistance to exporters by disseminating information on laws and markets of target countries.
However, the CBN emphasized that representative offices are barred from engaging in any financial transaction or carrying out any activity specified by the CBN from time to time.
To ensure compliance, the CBN has issued financial conditions for licensing representative offices, which include a non-refundable application fee of N5 million and a non-refundable licensing fee of N10 million.
This move by the CBN is aimed at regulating the activities of foreign banks’ representative offices in Nigeria and ensuring that they operate within the legal framework. The CBN’s guideline will ensure that foreign banks’ representative offices are not involved in banking activities that could lead to potential risks to the Nigerian financial system.
On non permissible activities, the CBN said: “The approved offices shall not engage in the following services/activities: Provision of services designated in Nigeria as banking business; provision of any commercial or trading activity that may lead to the issuance of invoices for services rendered; engage directly in any financial transaction; any other activity that may be specified by the CBN from time to time.”
On permissible activities, the CBN said: “Approved representative offices (Office) are permitted to carry out the following activities: Marketing the products and services of its foreign parent or an affiliate of the foreign parent licensed and domiciled outside Nigeria; carrying out research activities in Nigeria on behalf of the foreign parent; serving as a liaison between the foreign parent and local banks, private institutions within Nigeria and other customers of the foreign parent based in Nigeria.”
