Central Bank Ends Nigeria’s Universal Banking System
San Francisco March 15, (THEWILL) – As part of its reform in the banking sector, Nigeria's central bank said on Monday it has scrapped the West African country's universal banking system adding that banks with the license will now have to obtain licenses for each model of banking it intends to operate in the country.
CBN Director of Banking Supervision, Samuel Oni made the disclosure at the end of the bi-monthly Banker Committee meeting in Abuja.
"This is part of the ongoing reforms to redraw the banking structure to ensure that commercial banks face their traditional business and ensure that depositors' funds are not endangered.
"The new arrangement would protect commercial bank activities from pressures from non-commercial banking operations, to allow them concentrate in the provision of their traditional banking activities," Oni explained.
In line with the announcement, banks operating in Nigeria with universal licenses agreed to the regulator's proposal to divest their non-commercial banking operations within the next two years to enable them consolidate on their core banking businesses.
CBN's new directive will categorize local banks according to their various models, that is, Mortgage banking; Investment banking; Commercial banking and others, instead of having one bank operating all banking models.
"Those interested in the provision of specialized banking services, like non-interest banks, small and medium enterprises (SME) banking, would also be expected to get separate operational licenses."
Oni added that the new measure would also categorize banks into regional banks, national banks and international banks in the country.
The Financial Sector Surveillance Committee is expected to work out the details and modalities of the new directive.
The Lamido Sanusi led central bank has introduced new banking measures to strengthen the banking sector including bailing out some banks which were hit by exposures to bad loans in the oil and gas sector and stock market last year.