CBN wants to change rules for financial holding companies

The Central Bank of Nigeria (CBN) plans to change the rules for financial holding companies. This is to make the country’s financial system stronger and more stable.

The bank shared this news in a circular on Thursday. Rita Sike, who is the director of the Financial Policy and Regulation Department, signed the circular. She invited stakeholders to send their feedback on the new guidelines by 9 July.

"After several years of implementation, the CBN has found areas in the current guidelines that need improvement to boost how financial holding companies operate and how they are supervised," the statement said.

The CBN said these new guidelines would help create a safe and stable financial system.

The need for change comes after years of using the old rules that started in 2014. Those rules aimed to reduce risks from non-core banking activities within banking groups. The review of the regulations will fill gaps and keep up with new regulations and market changes.

Changes in Guidelines

One major change is the update on minimum capital requirements for financial holding companies. This will ensure they can support their subsidiaries financially.

The new guidelines also tackle issues found in shared services. This aims to stop any possible abuse or unfair advantage over banking subsidiaries.

According to the CBN, these changes will also set clear requirements for promoters who want to start financial holding companies.

The revised rules will allow financial holding companies to directly own shares in foreign subsidiaries, rather than having their Nigerian banking subsidiaries do it.

Additionally, financial holding companies must keep at least a 51 percent stake in each subsidiary. They also need to register as persons with significant control with the right corporate registration authority.