BDAN Backs CBN’s Harmonisation of Reporting Requirements on Banks’ Foreign Currency Exposures

The Bank Directors Association of Nigeria (BDAN) has backed the recent Guidelines/Circulars issued by the Central Bank of Nigeria (CBN), aimed at fortifying the nation’s financial system.
A statement signed by its chairman, Mr. Mustafa Chike-Obi, said the association wholeheartedly supports these comprehensive measures which underscore the commitment of the CBN to ensuring the stability and resilience of the Banking sector.

It added that the association applauds CBN’s commitment to proactive regulation and remains supportive of initiatives that contribute to the stability and prosperity of the Nigerian economy.

The statement read: “Amid concerns surrounding the escalating foreign currency exposure of Banks through their Net Open Positions, the leadership of the Central Bank of Nigeria (CBN) has issued a circular titled ‘Harmonisation Of Reporting Requirements on Foreign Currency Exposures of Banks’. In this directive, the CBN stipulates that the Net Open Positions (NOP) limit for overall foreign currency assets and liabilities should not exceed 20% short or 0% long of shareholders’ funds.“This directive, along with other prudential requirements outlined in the circular, plays a critical role in ensuring the effective management of foreign currency exposures. By imposing these limits, the CBN aims to mitigate potential losses that could pose
significant systemic challenges.”The bank directors also noted that these regulatory measures underscored a strategic initiative aimed at bolstering risk management, transparency, and accountability within the financial industry.The statement said BDAN acknowledged and commended CBN for its proactive stance in safe- guarding the interests of depositors, investors, and the overall economic well-being of Nigeria.It said BDAN views these requirements as a positive step towards creating a resilient financial landscape and preventing adverse effects on the Banking sector.The association therefore encouraged all banks to fully comply with the new directive and actively participate in the implementation process to achieve full compliance.It also acknowledged the meticulous work undertaken by the CBN in consulting stakeholders and experts to ensure a balanced and effective regulatory approach.“As advocates for responsible banking and ethical conduct, BDAN believes that these guidelines will contribute significantly to the long-term sustainability, growth, as well as the overall efficiency, transparency, and stability of the banking sector, ultimately contributing to the nation’s economic development.“BDAN pledges its continuous collaboration with the Central Bank of Nigeria and other stakeholders to foster a dynamic and resilient financial ecosystem that serves the interests of all Nigerians.“We believe that these steps are in the right direction to improve the effectiveness of the Banking system and we are fully in support,” the association said.