CBN prohibits foreign banks’ rep offices from engaging in banking activities
According to the Central Bank of Nigeria (CBN), foreign banks’ representative offices in Nigeria are not permitted to engage in various financial-related services, including those classified as banking businesses in Nigeria.
This was stated in a circular sent to all banks and Other Financial Institutions (OFIs) outlining the financial requirements for licensing representative offices, which include an N5 million non-refundable application fee and an N10 million non-refundable licensing fee.
An approved representative office of a foreign bank in Nigeria, according to the CBN, is a liaison office of the foreign bank licensed by the CBN, whose sole purpose is to market the products and services of its foreign parent as well as serve as a liaison between its foreign parent and local banks, an affiliate of the foreign parent, other financial institutions, private companies, and the general public. An approved representative office is not permitted to conduct banking or any other regulated activity in Nigeria.
The CBN stated that “the approved offices shall not engage in the following services/activities: provision of services designated in Nigeria as banking business; provision of any commercial or trading activity that may lead to the issuance of invoices for services rendered; engage directly in any financial transaction; or any other activity that may be specified by the CBN from time to time.”
“Approved representative offices (Office) are permitted to carry out the following activities: marketing the products and services of its foreign parent or an affiliate of the foreign parent licensed and domiciled outside Nigeria; carrying out research activities in Nigeria on behalf of the foreign parent; serving as a liaison between the foreign parent and local banks, private institutions within Nigeria, and other customers of the foreign parent,” the CBN stated.
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The CBN emphasized that representative offices play an important role in promoting their parent company’s brand and services, as well as promoting foreign direct investment in the host country by connecting the capital to various investment opportunities.
According to the guidelines, representative offices can also provide information to exporters in Nigeria about the laws and markets of target countries, facilitate seminars and forums in Nigeria where their foreign parents can meet with existing or potential customers, and compile and distribute economic and financial information or country reports to their foreign parent for use by customers.
