SAN FRANCISCO, April 30, (THEWILL) – The Central Bank of Nigeria (CBN) has declared that the Chairman and Chief Executive Officer (CEO) of any bank which fails to publish its annual account 12 months after the financial year end will be sacked.
This directive is contained in the CBN’s Monetary, Credit, Foreign Trade and Exchange Guidelines for Fiscal Years 2018/2019, released at the weekend, signed by CBN Governor Godwin Emefiele.
The apex bank says the policy aligns with the provisions of the Bank and Other Financial Institutions Act (BOFIA) 1991, which require banks to, subject to the written approval of the CBN, publish their audited financial statements- financial position and comprehensive income- in a national newspaper printed and circulated in Nigeria not later than four months after the end of each financial year.
The CBN also directed all banks, discount houses and their subsidiaries to continue to adopt December 31 as their accounting year end to allow the implementation of consolidated supervision.
“The CBN will continue to hold the Board Chairman and Managing Director of a defaulting bank directly responsible for any breach and impose appropriate sanctions, which may include barring the Managing Director or his/her nominee from participation in the Bankers’ Committee and disclosing the reason for such suspension,” the directive stated.
“It will also include suspension of the foreign exchange dealership licence of the bank and its name sent to the Nigerian Stock Exchange (in the case of a public quoted company) and removal of the Chairman and Managing Director/CEO from office if the accounts remain unpublished for 12 months after the end of the bank’s financial year.”
The new CBN policy also spells out borrowing terms and liquidity positions for commercial, merchant and noninterest banks. It says the minimum liquidity ratio for commercial, merchant and non-interest banks should be retained at 30, 20 and 10 per cent, subject to review from time to time.
“In the 2018/2019 fiscal years, discount houses will continue to maintain a minimum investment of 60 per cent of their total liabilities in government securities,” it continued.
“The ratio of individual bank loans to deposits is retained at a maximum of 80 per cent. The Net Open Position (NOP), long or short, of the overall foreign currency assets and liabilities taking into cognisance both on and off-balance sheet items will not exceed 10 per cent of shareholders’ funds unimpaired by losses.
“Banks are expected to hedge borrowing using financial market tools acceptable to the CBN; borrowings must be subordinated debts with prepayments allowable only at the instance of the bank and subject to prior approval of the CBN; and all debts, with the exception of trade lines, will have a minimum fixed tenor of five years.”
It advised banks to seek profitability by driving down cost and charging competitive rates instead of charging excessive rates of interest.
