CBN lists conditions for foreign investors in banking industry

The Central Bank of Nigeria (CBN), has emphasized that foreign investors will not be exempted from complying with the Federal Government’s policy on N25 billion minimum capital for any bank operating in Nigeria.
Mr. Festus Odoko, head of corporate affairs, CBN, said yesterday that foreign investors are fully permitted to invest in existing Nigerian banks provided they meet the minimum capital requirement and other regulatory conditions for procuring a banking licence as stipulated by the apex bank.
According to the CBN, any foreign individuals or institutional investors could also invest in existing Nigerian banks.
However, Odoko noted that there is a condition that no single foreign individual or institutional investor should acquire more than the share of the single largest Nigerian individual/institutional investor in any bank. The condition remains, provided the aggregate shareholding of the foreign investors do not exceed 10 per cent of the total capital of the bank.
Mr. Alderman Lewis, the Lord Mayor of London, was quoted during his recent visit to Nigeria, as saying that the Nigerian government is not opening up its banking system to foreign competition.
The CBN said there is need to explain the position of government following the comments credited to the United Kingdom representative. Under the present condition for operation in the country’s banking system, the apex bank states that foreign banks could acquire or merge with a local bank existing in Nigeria.
Such a foreign bank, according to CBN’s policy, however, must have operated in Nigeria for at least five years and established branches in at least 2/3 of states of Nigeria excluding the state capital.
The CBN equally stipulates that the foreign bank or investors’ shareholding arising from the merger or acquisition of a local bank does not exceed 40 percent of the total capital of the resultant entity.
The apex bank clarified that existing shareholding structure of Nigerian banks in which there are foreign interests in excess of 10 per cent might subsist but such foreign interest should not exceed the current level.

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