By Yakubu LAAH InvestAdvocate

Lagos (INVESTADVOCATE)-The Central Bank of Nigeria (CBN) on Friday unveiled new guidelines for licensing financial and regulation of Financial Holding Companies in Nigeria.

This is contained in a circular dated August 29, 2014 with reference number FPR/DIR/CIR/GEN/04/011 and signed by Kevin Amugo, director, financial policy and regulation department of the CBN.

The circular reads thus: ” The CBN in 2010 introduced a new banking model, which requires banking groups with non-core banking activities to incorporate a holding company structure.

To facilitate the establishment and operation of holding companies, the bank in collaboration with stakeholders developed guidelines for setting up, regulating and supervising financial holding companies in Nigeria. The guideline stipulates minimum licensing governance and prudential requirements for prospective holding companies. It also prescribes procedure for the conversion of existing institutions for holding company structure.

It is expected that the guidelines forwarded herewith shall ensure adequate ring-fencing of financial institutions under the purview of the CBN. The guidleines should be read in conjunction with other relevant CBN regulations on the subject,” the circular read.

The CBN said that licensing process shall be in two phases: Approval-in-Principle and Final Licence.

Part of requirements for grant of Approval-In-Principle is a non-refundable application fee of N2,000,000 (Two Million Naira Only)or such other amount that the CBN may specify from time to time; payable to the CBN by bank draft or through electronic transfer.

While one of the requirements for granting a final licence is that not  later than six (6) months after obtaining the A.I.P,is the payment of a non-refundable licensing fee of N10,000,000.00 (Ten Million Naira only), or such other amount that the CBN may specify from time to time, payable to the CBN by bank draft or by electronic transfer.

The CBN said this guidelines supersedes it’s circular on “Definition and Structure of Holding Companies in Pursuance of the New Banking Model” dated December 30, 2011 and referenced FPR/CIR/GEN/01/024.

the promoters of a proposed financial holding company shall submit an application to the CBN for the grant of a final licence