Regulatory Alerts2012-01-03 | FPR/DIR/CIR/GEN/01/024Definition And Structure Of Holding Companies In Pursuance Of The New Banking Model
In 2011, following the repeal of Universal Banking Guidelines by Nigeria's Central Bank (CBN), new licensing requirements for commercial, merchant, and specialized banks were introduced to provide clarity on the conduct of banking business. Consequently, a circular was issued defining the structure of Holding Companies in relation to the financial services industry as envisaged under the newly established New Banking Model. A financial Holding Company is defined as an institution licensed by the CBN that manages and invests in companies providing financial services. The only income stream for non-operating financial Holding Companies shall be dividend plus service fees, from their subsidiaries, but they are permitted to transform into operating financial Holding Companies with prior approval of the CBN and necessary filings with relevant authorities. These circulars offer guidance on the application of these new banking model standards.