CBN’s guidelines for regulation of foreign banks’ representative offices in Nigeria

A draft of the Guidelines for the Regulation of Representative Offices of Foreign Banks in Nigeria (the Guidelines) was released by the Central Bank of Nigeria (CBN) on October 12, 2022. This release is in relation to the CBN’s authority under the Banks and Other Financial Institutions Act, 2020 (BOFIA), which allows the apex bank to require foreign banks to obtain prior CBN approval before opening representative offices in Nigeria. 

This article aims to highlight some of the significant provisions of the Guidelines and how it regulates foreign banks’ operations in Nigeria.

The representative office of a foreign bank

The Guidelines provide conditions for foreign banks to operate representative offices in Nigeria. The tasking question, however, is what classifies as a representative office in Nigeria. Under the Guidelines, a representative office serves as an extension or a liaison or satellite office of a foreign bank. The representative office is to function as a direct agent of the foreign bank in Nigeria offering the foreign bank’s products and services in line with the laws of Nigeria.

Foreign banks also act as a representation between the foreign bank and local institutions, banks businesses, and the general public. The foreign bank’s representative offices can offer loans, collect and save deposits and also function as an avenue for general investment opportunities for Nigerian businesses and individuals. 

Foreign banks are also expected to set up a separate legal entity in Nigeria by registering as a company under the Corporate Affairs Commission (CAC). As a result of this, foreign bank representative offices in Nigeria will be considered residents for purposes of corporate income tax. 

The registration of foreign banks as separate entities in Nigeria has numerous significant benefits. A major benefit is that the foreign parent bank can first be protected by a separate entity from any liabilities resulting from its operations in Nigeria. 

Activities of foreign banks representative offices in Nigeria

A list of permitted activities for foreign banks’ representative offices in Nigeria is provided in the Guidelines. 

The Guidelines permitted activities ranging from functions to practices, including serving as an intermediary between a foreign bank and local banks, foreign bank clients in Nigeria, and other private institutions; marketing foreign bank’s products or its licensed affiliate resident outside of Nigeria; acquiring for the Foreign Bank businesses regarding the provision and/or syndication of loans in foreign currencies; supplying Nigerian exporters with information about the legal systems and markets in target nations where the Foreign Bank or its affiliate has a subsidiary, and putting Nigerian exporters in touch with potential clients in countries where the Foreign Bank conducts business.

Also, foreign banks’ representative offices are prohibited from participating in commercial or trading activities that could result in the issuance of invoices for services rendered; accepting orders on behalf of the foreign bank; and directly engaging in any financial transaction. It is believed that these prohibitions would not apply if the foreign bank incorporates a separate legal entity or a local subsidiary in Nigeria.

In addition, a foreign bank’s representative office under the Guidelines means a financial institution that is registered under the laws of their country with the main activities including offering loans, accepting deposits, and offering current and savings accounts to customers; a bank that is licensed under foreign law and has its registered headquarters outside of Nigeria; and any operating bank or financial holding company with headquarters abroad and foreign ownership that holds a majority stake in one or more banks or businesses with primary operations that resemble those of banks.

Steps to Licensing a foreign bank’s representative office in Nigeria

Foreign banks must apply for a license from the CBN to open a representative office in Nigeria. The steps for obtaining the license are broken down into three categories:

1. Approval-in-Principle

The applicant must submit a formal application to the Governor of the CBN along with all the necessary paperwork, which is outlined in the Guidelines. 

The documents needed for the approval-in-principle include a working memorandum of understanding between the CBN and the home supervisory authority, a letter of approval or a no objection from the home supervisory authority approving the establishment of a representative office, a thorough business plan or feasibility report, and proof of name reservation with the CBN.

2. Final Approval

After receiving the approval-in-principle, the applicant must submit an application to the CBN for the issuance of a final licence within three months. 

The application should be followed by the bank’s memorandum and articles of incorporation, the names, addresses, and resumes of the management staff, copies of the employment offers and acceptance letters for the management staff, as well as proof that the licence fee has been paid.

3. Inspection

The proposed representative office’s premises and facilities will be inspected by the CBN before the final license is granted. 

This inspection includes a meeting with the Representative Office’s board members and management representatives as well as a look at the infrastructure of the office’s physical building.

Reasons for opening foreign bank’s representative office

Representative offices are typically opened by foreign banks for one or more of the following reasons: 

1. To assist businesses and high net-worth individuals looking to expand or conduct business abroad, as well as group companies with operating subsidiaries abroad.

2. When a foreign bank seeks to have only a minimal presence in a foreign nation.

3. As a first step before establishing an operating subsidiary abroad, creating and facilitating correspondent banking connections with local banks abroad.

4. To expand the business and promote the foreign bank’s goods and services to local private and public clients.

5. To act as a point of contact between local banks, other financial institutions, private companies, and the general public.

6. To aid exporters in a foreign nation in locating fresh export markets and fostering exports back to their nation.

7. Cross-border syndication of foreign loans, mergers and acquisitions, securitizations, and fundraising are a few examples of common transactions.

8. To carry out market research and gather valuable financial and economic data about regional markets to pursue opportunities for the foreign parent in investment banking and business lending.

9. Wire instructions and transactions that start or end in foreign countries are frequently made easier with the help of correspondent banking relationships.


The business world is filled with several opportunities for investing. To gain leverage foreign banks can access the Nigerian market by registering with the CBN to function. 

The steps begin with the approval-in-principle and extend to the time the licence is approved. Once representative offices have been granted a license by the CBN, they will be required to adhere to the operational and reporting guidelines outlined in the Guidelines. 

The CBN must also have unrestricted access to the representative offices’ internal systems, papers, and property to monitor ongoing compliance with the Guidelines and other relevant laws and regulations.

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Richard Okoroafor

Richard Okoroafor

Richard is a brilliant legal content writer who doubles as a finance lawyer. He brings his wealth of legal knowledge in corporate commercial transactions to bear, offering the best value that exceeds expectations.

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