CBN To Assess Risks Of Banks With Cross-border Expansion

The Central Bank of Nigeria has said it will introduce guidelines to assess the level of exposure of banks with international authourisation that are engaging in cross broader expansion.

This would enable it to monitor the risks of their operations in the countries where they are operating.

It said this in its report on ‘Monetary, credit, foreign trade and exchange policy guidelines for fiscal years 2020/2021’, on cross-border supervision.

Part of the report read, “To further strengthen the regulation and supervision of cross-border banks, the CBN shall commence the conduct of country risk assessment in respect of banks embarking on cross-border expansion during the 2020/2021 fiscal years.

“To this end, guidelines on country risk assessment shall be issued to the industry and all banks with international authorisation shall be required to comply.”

It added, “The guidelines aim at setting supervisory expectations regarding the management of country risk by banks and is applicable to all banks with international activities and exposure to country and transfer risk.

“The supervisory authority shall apply to these guidelines based on the nature of a bank’s international activities and cross-border exposures, as well as the risk in countries where the bank has or plans to have operations.

“The review of banks management of country risk by the CBN will be aimed at assessing the level of risk arising from their international activities and exposures and the effectiveness of their internal governance and controls for the management of exposure to country and transfer risk.”

It also said that to determine its level of compliance with the Basel Core Principles for Effective Banking Supervision, the CBN would carry out a self-assessment of compliance with the BCPs preparatory to the Financial Sector Assessment Programme.