CBN threatens banks against funding foreign subsidiaries

THE Central Bank of Nigeria (CBN) on Sunday threatened to punish any banks that contravene its directive on non-funding of foreign subsidiaries.The Director, Corporate Communication of the apex bank, Ugochukwu Okoroafor, told the News Agency of Nigeria, in Lagos, that it would penalise any erring bank that continued to fund its foreign subsidiary.The Deputy Governor, Banking Operations,Tunde Lemo, in a forumin Lagos on August 2, saidthat the apex bank would stop banks fromusingtheir funds to financeforeign subsidiaries.Okoroafor said that the CBN introduced the new directive to ensure that the level of capital flight was reduced to its minimal level.He added that banks had been found guilty of this in the past.'The appropriate penalties will be imposing on erring banks found guilty, depending on the gravity of the offence.''According to him, the idea is to ensure that funds are not moved out of the country anyhow.Okoroafor said that banks whichintend to remain off-shore should state clearly to CBN andwhether their foreign subsidiaries wouldbe financed by injecting new capital or will invite new investors.He said that the apex bank was working hard to strengthen and restore sanity to the financial sector.
Click here to read full news..