•Pegs licencing fee at N10 million
James Emejo in Abuja
The Central Bank of Nigeria (CBN) yesterday stated that Representative Offices of foreign banks in the country are not allowed to engage in an array of financial-related services, including the provision of services designated in Nigeria as banking business.
The central bank disclosed this in a circular on the “Guidelines for the Regulation of the Representative Offices of Foreign Banks in Nigeria”, dated May 3, 2023, directed to all banks and Other Financial Institutions (OFIs).
The circular, which was obtained from the apex bank’s website was signed by the CBN Director, Financial Policy and Regulation Department, Mr. Muhammad Musa.
The central bank further detailed the financial requirements for the representative offices to include a non-refundable application fee of N5 million and a non-refundable licensing fee of N10 million.
The bank particularly noted that representative offices of foreign banks serve the important purpose of showcasing the brand and services of its parent company, and could also stimulate foreign direct investment to the host country by connecting capital to various investment opportunities.
The CBN pointed out that the regulation was meant to specify the requirements for the licencing and operations of approved representative offices of foreign banks in Nigeria.
Specifically, the framework disallows any commercial or trading activity that may lead to the issuance of invoices for services rendered by the affected entities.
The guideline further forbade them from engaging directly in any financial transaction, except those related to marketing the products and services of its foreign parent or an affiliate of the foreign parent licensed and domiciled outside Nigeria – as well as any other activity that may be specified by the CBN from time to time.
However, the representative offices are permitted to among other things carry out research activities in Nigeria on behalf of the foreign parent; and serve as a liaison between the foreign parent and local banks, private institutions within Nigeria and other customers of the foreign parent based in the country.
The regulation also allows them to pursue business opportunities for the foreign parent or affiliated institutions regarding the availing and/or syndication of foreign currency-denominated loans as well as connect banks and other financial institutions to its foreign parent.
They are also allowed to assist exporters in Nigeria with information related to the laws and markets of target countries in which the foreign parent or any of the Group’s affiliates has a subsidiary; facilitate seminars, forums and other activities within Nigeria through which a foreign parent may meet with and hold further discussions with existing or potential customers in Nigeria, as well as collate and distribute economic and financial information or country reports to its foreign parent for use by customers of the foreign parent; and assist customers of the foreign parents that desire to invest in Nigeria or do business with Nigerian companies subject to the extant data protection regulations among others.
The framework covers the scope and applicability of the guidelines, permissible and non-permissible activities for representative offices as well as its licensing, governance, reporting and operational requirements.
Representative offices currently operating in Nigeria (including those with formal approvals from CBN) are required to comply with the requirements of the guidelines within 180 days from the date of its release.
