The Central Bank of Nigeria (CBN) has said that any investors planning to acquire a five per cent stake in any bank operating in the country will need to obtain prior approval and no objection from the apex bank.
The new Corporate Governance Guidelines for Commercial, Merchant, Non Interest and Payment service Banks released by CBN over the weekend, the apex bank said that no individual or group of individuals or corporate entities shall own controlling interest in more than one bank.
Under the protection of shareholder’s rights provisions, the new regulations attempt to address recent events in the capital market affecting some commercial banks in the country.
The guidelines specifically said “CBN’s prior approval and No Objection shall be sought and obtained before any acquisition of shares of a bank (including through the capital market), that would result in equity holding of five per cent and above, by any investor.”
“Except where prior approval of the CBN is granted, no individual, group of individuals, their proxies or corporate entities shall own controlling interest in more than one bank,”
The new regulation also states that where the apex bank has an objection to any of the acquisition, the notice of the objection must be communicated to the bank. The bank then has 48 hours to notify.
“Where the CBN has an objection on any acquisition as stated in Section 20.2 notice of the objection shall be communicated to the bank, and the bank shall notify such investor(s) within forty-eight (48) hours.”
For government ownership in the bank the protection of shareholders rights regulation also said “Government’s direct and indirect equity holding in a bank shall not be more than ten per cent (10%), which shall be divested to private investors within a maximum period of five years from the date of investment,” it added.
For existing investments above five years, the central bank said the bank shall within two years from the effective date of this Guideline, comply with the provision.”
The central bank regulation also addresses Financial Holding Companies (FHC), and activities around mergers and acquisitions.
According to the regulation, no director or shareholder can change control of a bank without the prior approval of the bank. It also does not allow the transfer of 5 per cent and above of a bank to any shareholder without the prior approval of the CBN.
No FHC or any of its directors, shareholders or agents shall enter into an agreement which results in a change of control of the holding.
It said CBN’s prior approval and No Objection shall be sought and obtained, before any acquisition of shares of an FHC by an investor (including through the capital market), that would result in equity holding of five per cent and above.