Bank directors pledge support for CBN’s new directive on FX NOP

•Direct banks to comply ‘fully’ with policy
The Association of Bank Directors Association of Nigeria (BDAN) has applauded steps taken by the Central Bank of Nigeria (CBN) to fortify the nation’s financial system, saying the measures underscore the apex bank’s commitment to ensuring the stability and resilience of the banking sector.

Amid concerns surrounding the escalating foreign currency exposure of banks, the CBN leadership issued a circular titled, ‘Harmonisation of reporting requirements on foreign currency exposures of banks,’ which said: “The net open position (NOP) for overall foreign currency assets and liabilities should not exceed 20 per cent short or 0 per cent long of shareholders’ funds”.

BDAN’s Chairman, Mustafa Chike-Obi, said the directive, along with other prudential requirements outlined in the circular, played a critical role in ensuring the effective management of foreign currency exposures.

“By imposing these limits, he said, the CBN aimed to mitigate potential losses that could pose significant systemic challenges.

He added that the regulatory measures underscore a strategic initiative aimed at bolstering risk management, transparency and accountability within the financial industry and commended the CBN for its proactive stance in safeguarding the interests of depositors, investors and the overall economic well-being of the country.

Revealing that the association viewed the requirements as a positive step towards creating a resilient financial landscape and preventing adverse effects on the sector, Chike-Obi praised CBN’s commitment to proactive regulation and said they remain supportive of initiatives that contribute to the stability and prosperity of the economy.

He encouraged all banks to comply fully with the new directives and actively participate in its implementation process to achieve full compliance.

“We acknowledge the work undertaken by the CBN in consulting stakeholders and experts to ensure a balanced and effective regulatory approach and as advocates for responsible banking and ethical conduct, we believe these guidelines will contribute significantly to our long-term sustainability and growth,” he said.

Pledging continuous collaboration with the apex bank and other stakeholders to foster a resilient financial ecosystem that serves the interests of all, he reiterated that the steps are in the right direction to improve the effectiveness of the banking system and they support them fully.

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