The Central Bank of Nigeria (CBN) has announced that representative offices of foreign banks in Nigeria are not permitted to engage in certain financial services, including those designated as banking business.
The CBN disclosed this in a circular titled "Guidelines for the Regulation of the Representative Offices of Foreign Banks in Nigeria," which was directed to all banks and Other Financial Institutions (OFIs) and signed by the Director, Financial Policy and Regulation Department, Mr. Muhammad Musa.
The circular detailed the financial requirements for representative offices, which include a non-refundable application fee of N5 million and a non-refundable licensing fee of N10 million.
While foreign representative offices can showcase their parent company's brand and services and stimulate foreign direct investment, they are not permitted to engage in commercial or trading activity that may lead to invoicing for services rendered by the entities.
The guidelines also prohibit direct engagement in financial transactions, except those related to marketing the products and services of the foreign parent or its affiliate.
Representative offices are, however, allowed to carry out research activities, serve as liaisons between foreign parents and local banks, and facilitate seminars and forums.
They can also assist customers of foreign parents who want to invest in Nigeria or do business with Nigerian companies, subject to existing data protection regulations.
The framework specifies the requirements for the licensing and operations of approved representative offices of foreign banks in Nigeria and covers the scope and applicability of the guidelines, permissible and non-permissible activities, licensing, governance, reporting, and operational requirements.
Existing representative offices in Nigeria (including those with formal approvals from the CBN) must comply with the guidelines within 180 days from the release date of the circular.
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