The Bank Directors Association of Nigeria (BDAN) has called on banks to fully comply with the recent directive of the Central Bank of Nigeria, CBN, on their maximum foreign currency exposures.
Making this call in a statement issued yesterday, BDAN commended the directive of the CBN and other recent forex measures, saying, “The Association wholeheartedly supports these comprehensive measures which underscore the commitment of the CBN to ensuring the stability and resilience of the Banking sector.
The Association said: “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.
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“These regulatory measures underscore a strategic initiative aimed at bolstering risk management, transparency, and accountability within the financial industry. The Bank Directors Association of Nigeria (BDAN) acknowledges and commends the Central Bank for its proactive stance in safeguarding the interests of depositors, investors, and the overall economic well-being of Nigeria.
“BDAN views these requirements as a positive step towards creating a resilient financial landscape and preventing adverse effects on the Banking sector. The Association applauds the CBN’s commitment to proactive regulation and remains supportive of initiatives that contribute to the stability and prosperity of the Nigerian economy.
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