Regulatory Alerts2014-01-30 | OFI/DIR/CIR/GEN/01/107Recognition of Investment Properties/Real Estate Development in the Financial Statement of Primary Mortgage Banks in Nigeria
The Nigerian Central Bank's (CBN) October 11, 2013 circular letter addressed all Primary Mortgage Banks (PMBs) in the country. It reminded PMBs of Section 1.2 and 1.3 in the Guidelines for PMBs which prohibits Real Estate Development as a non-permissible activity. Consequently, CBN instructed PMBs to commence disposing off all their real estate developments at arm's length, classifying these as Non-Current Assets Held for Sale and recognizing them according to IFRS 5. This was a directive based on the Central Bank of Nigeria's commitment to maintaining financial stability and prudential practices in the country.
Central Bank Of Nigeria
CBN website: www.cbn.gov.ng Ref: OFI/DIR/CIR/GEN/01/107 October 11, 2013 CIRCULAR LETTER TO ALL DIRECTORS OF PRIMARY MORTGAGE BANKS IN NIGERIA RECOGNITION OF INVESTMENT PROPERTIES/REAL ESTATE DEVELOPMENTS IN THE FINANCIAL STATEMENTS OF PRIMARY MORTGAGE BANKS IN NIGERIA The attention of the directors of Primary Mortgage Banks (PMBs) is by this Circular drawn to Sections 1.2 and 1.3 of the Guidelines for PMBs in Nigeria which list Real Estate Development as a non-permissible activity.
In compliance with the provision, all PMBs should commence the disposal of all Real Estate Developments in their books and ensure that the sales are conducted at arm's length.
In view of the above, all PMBs are required to classify existing Real Estate Developments in their books as Non-Current Assets Held for Sale and recognize them in accordance with IFRS 5.
Please be guided accordingly. Olufemi Fabamwo Director, Other Financial Institutions Supervision Department Central Bank of Nigeria, Abuja