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CBN Orders Rep Offices To Comply With New Guidelines Within 180 Days

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Central Bank of Nigeria (CBN) has ordered representative offices operating in Nigeria including those with formal approvals, to comply with the requirements of its newly released guidelines of operation within 180 days from the release date.

This was contained in a report released on CBN’s website on May 8, consequently stating the guidelines for the regulation of representative offices of foreign banks in Nigeria.

According to the report, the guidelines on non-permissible activities for the representative offices were as follows:

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  1. Provision of services designated in Nigeria as banking business. 
  2. Provision of any commercial or trading activity that may lead to the issuance of invoices for services rendered.
  3. Engage directly in any financial transaction, save for those transactions that are related to (3-1) above.
  4. Any other activity that may be specified by the CBN from time to time.

However, the CBN also classified the institutions which the guidelines were applicable to as:

  1. A bank licensed under any foreign law, whose registered head office is outside Nigeria.
  2.  Any financial institution licensed under foreign law, whose primary business includes the receipt of deposits, granting of loans and/or provision of current and savings accounts.  
  3. Any foreign-owned operating bank/financial holding company that is foreign-based, that owns controlling interest in one or more banks or institutions whose primary business includes the receipt of deposits, granting of loans and provision of current and savings accounts.  

What Rep Offices Were Permitted To Do

  1. Marketing the products and services of its foreign parent or an affiliate of the foreign parent licensed and domiciled outside Nigeria.
  2.  Carrying out research activities in Nigeria on behalf of the foreign parent.
  3. 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.
  4. Pursuing business opportunities for the foreign parent or affiliated institutions regarding the availing and/or syndication of foreign currency denominated loans.
  5. Connecting banks and other financial institutions to its foreign parent.
  6. Assisting exporters in Nigeria with information related to the laws and markets of target countries in which the foreign parent or any of the Group’s affiliates has a subsidiary.
  7. Facilitating seminars, forums and other activities within Nigeria through which a foreign parent may meet with and hold further discussions with existing or potential customers in Nigeria.
  8. Collating and distributing economic and financial information or country reports to its foreign parent for use by customers of the foreign parent; and assisting customers of the foreign parents that desire to invest in Nigeria or do business with Nigerian companies subject to the extant Data Protection Regulation.
  9. Connecting exporters in Nigeria with potential customers in jurisdictions where the parent company operates; and assisting Nigerian exporters with finding new markets through its international offices.
  10.  Representative offices are permitted to record revenue, in so far as such revenue does not relate to non-permissible activities as set out in section 3.2 below and emanates from intra-group services rendered to the parent company with such revenue taxed in accordance with transfer-pricing regulations. Revenue in this provision is limited to line items such as staff costs

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