CBN directive on Foreign Subsidiaries - Recapitalize or Divest
Category: Money Market
June 29, 2012 / Meristem
CBN has stopped Nigerian banks from recapitalising their foreign subsidiaries due to the pressure it places on the capital base of parent banks.
The parent’s inability to raise capital due to the current capital market lull makes it even worse. Now the riot act has been read, the parent [Nigerian] bank should either raise capital to recapitalise the foreign subsidiary in the host country or exit such foreign subsidiary in the event of failure to raise capital.