The attention of the Central Bank of Nigeria has been drawn to two publications, the first in the Vanguard Newspaper of January 28, 2010 titled: CBN to ensure 5% Equity Holding in Banks-Sanusi and a second on the front page of the Vanguard Newspaper of February 1, 2010, titled: CBN limits bank MDs, boards’ loan approval.
In the first article of January 28, 2010, the Deputy Governor, Financial System Stability, Dr. Kingsley Moghalu, was alleged to have said that “as part of the on going reforms in the banking sector, and in our drive to ensure sanity in the nation’s financial system, we will soon be undertaking a review of the structure of the banks, and it is very likely that we are going to ensure that no one holds more than five per cent stake in any bank in Nigeria”.
The above report is a misrepresentation of the Deputy Governor’s comments at a recent breakfast meeting of the Nigeria-South African Chamber of Commerce. For the avoidance of doubt, sections 5.1.3 of the Code of Corporate Governance for Banks in Nigeria issued by the CBN in March 2006 requires shareholders who wish to own more than 10 per cent equity shares in any Nigerian bank to obtain the prior written approval of the Central Bank.
The CBN does not intend to limit the percentage of shareholding of investors in Nigerian banks as this will not only negate the provisions of the Banks and Other Financial Institutions Act, 1991 as amended but also the Nigerian Enterprises Promotion Act which encourages unfettered participation of both local and foreign investors in all Nigerian enterprises, including the banking sector.
In the same vein, the February 1, 2010 Vanguard publication, quoting from page 64 of a Circular issued by the CBN dated January 18, 2010, titled “Minimum Information to be disclosed in Financial Statements for the Year Ended December 31, 2009”, claimed that the CBN had set credit approval limits for banks.
The CBN also wishes to inform the general public that this position is untrue as the Circular only provides guidance on the minimum disclosures by banks and discount houses in their annual accounts to enhance transparency and ensure standardization in financial reporting in annual financial statements. The figures in the circular are therefore merely hypothetical figures that do not in anyway represent credit approval limits set by the CBN.
For the avoidance of doubt, the primary responsibility for managing banks and discount houses rests with the Boards and Managements of those institutions, a position that the CBN recognizes and respects. The CBN has not and will not impose approval limits for banks and discount houses as those are matters of discretion for the Boards and Management of those institutions.
The general public is hereby advised to be guided accordingly.
Head, Corporate Affairs
Central Bank of Nigeria