CBN Denies Limiting Shareholding Percentage in Banks

The Central Bank of Nigeria (CBN) in reaction to media reports has said it does not intend to limit the percentage of shareholding of investors in Nigerian banks.
It said this would not only negate the provisions of the Banks and Other Financial Institutions (BOFIA) 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.
The apex bank is saying this in reaction to media reports, which it said is a misrepresentation of Kingsley Moghalu, the deputy governor, Financial Sector Stability’s comments at a recent breakfast meeting of the Nigeria-South African Chamber of Commerce.
A statement signed by Mohammed Abdullahi, head, Corporate Affairs of the CBN, said: “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.”
“In the same vein, the February 1, 2010 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 standardisation 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,” the statement added.
The statement explained that the primary responsibility for managing banks and discount houses rests with the Boards and Managements of those institutions, a position that the CBN recognises 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.”