The Central Bank of Nigeria (CBN) has said foreign banks’ representative offices in the country are not permitted to engage in various financial-related services, including those categorised as banking business in Nigeria.
This was stated in a circular directed to all banks and Other Financial Institutions (OFIs), detailing the financial conditions for licensing representative offices, which include a non-refundable application fee of N5 million and a non-refundable licensing fee of N10 million.
According to the CBN, an approved representative office of a foreign bank in Nigeria is a liaison office of the foreign bank licensed by the CBN, whose sole object is to market the products and services of its foreign parent as well as serve as 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 barred from carrying out banking business or any other regulated activity in Nigeria.
On non permissible activities, the CBN said: “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; any other activity that may be specified by the CBN from time to time.”
On permissible activities, the CBN said: “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 based in Nigeria.”
The CBN emphasised that representative offices play a critical role in showcasing the brand and services of their parent company and may also promote foreign direct investment in the host country by linking capital to various investment opportunities.
The guideline stated that representative offices can also help exporters in Nigeria with information related to the laws and markets of target countries, facilitate seminars and forums in Nigeria through which their foreign parent may meet with existing or potential customers, as well as collate and distribute economic and financial information or country reports to their foreign parent for use by customers.
