- CBN has issued new guidelines for foreign banks with representative offices in Nigeria
- The guideline instructs that, among several others, allows foreign banks to offer loans in U.S. dollars to Nigerian companies
- This move is expected to increase the availability of dollar-denominated loans for businesses
The Central Bank of Nigeria (CBN) has authorized foreign banks with offices in the country to give loans in dollars to Nigerian companies.
The CBN’s decision was made public in a new guideline signed by Muhammad Musa, the Director of Financial Policy and Regulation Department.
According to the guideline, the apex bank authorized the foreign bank representatives to work with their parent companies in availing and syndicating foreign currency-denominated loans (dollar loans) to Nigerian companies.
The nation reports that the move by CBN will improve dollar liquidity and ease foreign exchange pressure.
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Other activities foreign banks representative in Nigeria are permitted to carry out
The CBN guidelines also listed various activities that the representatives of foreign banks in Nigeria are allowed to carry out.
One of the permissible activities is to market the products and services of its foreign parent.
They can also conduct 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 Nigeria.
The banks can also connect banks and other financial institutions to their parent firm, Punch reports.
Assisting 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.
Facilitating 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.
Collating and distributing economic and financial information or country reports to its foreign parent for use by customers of the foreign parent; and assisting customers of the foreign parents that desire to invest in Nigeria or do business with Nigerian companies subject to the extant Data Protection Regulations.
Connecting exporters in Nigeria with potential customers in jurisdictions where the parent company operates; and assisting Nigerian exporters with finding new markets through its international offices.
“Representative offices are permitted to record revenue, in so far as such revenue does not relate to non-permissible activities as set out in section 3.2 below and emanates from intra-group services rendered to the parent company with such revenue taxed in accordance with transfer-pricing regulations. Revenue in this provision is limited to line items such as staff costs and business premises leasing fees.”
Fidelity targets five banks across Africa
In another report, Fidelity Bank is looking at acquiring five commercial banks across the continent.
This move comes on the heels of the bank’s recently finalizing acquisition in United Kingdom.
Fidelity is currently the sixth-largest lender in Nigeria, with assets worth N4 trillion, and the bank has set new growth targets.
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