Regulatory Alerts2013-04-08 | BSD/DIR/GEN/LAB/06/017Re: Review of Risk Weights On Certain Industry Exposures In The Computation Of Capital Adequacy
The Central Bank of Nigeria has clarified its guidelines on risk weights for industry exposures, capital adequacy, and related-party transactions. Excessive exposure to a particular industry within a sector will attract a 150% risk weight. Investments in Federal Government of Nigeria Bonds remain at zero risk weight, while those in eligible State Government Bonds will have a 20% risk weight. All unauthorized breaches of the single obligor limit will be treated as capital impairment. Credit transactions within holding company structures must follow specific treatment guidelines, including assigning a 100% risk weight for loans fully secured, deducting certain inter-group loans from bank capital, and ensuring tangible, realizable security for such loans. This updated guidance supersedes an earlier letter dated January 31, 2013 and will take effect from January 1, 2014.