New regulation requires CBN approval to acquire 5% of any Nigerian bank

July 14, 2023

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Any investor looking to acquire up to 5% of any bank in Nigeria will need to obtain prior approval and no objection from the central bank.

This is according to section 20.2 of the new Corporate Governance Guidelines for Commercial, Merchant, Non-Interest, and Payment Service Banks in Nigeria.

Classified under the protection of shareholder’s rights provisions, the new regulations attempt to also address recent events in the capital market affecting some commercial banks.

“CBN’s prior approval and No Objection shall be sought and obtained before any acquisition of shares of a bank (including through the capital market), that would result in equity holding of five per cent (5%) and above, by any investor.”

The regulation also stated that no one can own controlling stake in more than one bank, except there was a prior approval of the apex bank.

“Except where prior approval of the CBN is granted, no individual, group of individuals, their proxies or corporate entities shall own controlling interest in more than one bank.”

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The new regulation also states that where the central bank has an objection to any of the acquisition, the notice of the objection must be communicated to the bank. The bank then has 48 hours to notify.