The commercial banking license is given out for banking activities that are authorized at the national, regional, or international levels. A national level banking license requires a minimum paid-up share capital of N25 billion, or any other amount the CBN may specify, while a regional banking license requires N10 billion, and an international commercial banking license requires N50 billion.
The bank operators must adhere to all prudential rules and regulations established by the CBN on the necessary level of capital adequacy, liquidity, and cash reserve in order to receive the commercial banking license.
Services A CBN Banking License Can Allow You to Offer
- Offer credit and financial resources.
- Deal in foreign exchange and offer foreign exchange services, which are subject to any other laws and CBN regulations, the bank’s foreign exchange authorized dealership license, and other requirements.
- Receive deposits from natural (individuals) and legal (entities) persons and manage current savings accounts (companies).
- Offer consumer banking services, such as mortgage products.
- Perform settlement bank functions with CBN permission.
- Offer treasury management services, which may include making money market, fixed income, and foreign exchange investments on clients’ behalf and are likewise subject to Central Bank approval.
- Offer custodial assistance.
- Offer financial advising services related to commercial banking activities that are exempt from SEC filing requirements.
- Invest in non-convertible debt instruments and engage in derivative transactions only after receiving CBN authorisation and as allowed by CBN instructions and circulars.
- Offer non-investment banking services with the CBN’s consent.
- Engage in fixed income trading, if properly licensed to function as a Primary Dealer Market Maker to trade in securities such as Federal Government bonds, treasury bills, treasury certificates, and such other certificates as may be prescribed by the CBN.
CBN Banking License Classification.
Regional Banking License
A commercial bank with regional banking permission is allowed to operate its banking business operations in the Federal Capital Territory and up to a maximum of twelve (12) states of the Federation that are located in no more than two (2) geographic zones of the Federation.
National Banking License
A commercial bank with national banking authorization is allowed to conduct banking operations in every State of the Federation, and a commercial bank with international banking authorization is allowed to conduct banking operations both inside and outside of the Federation in any country of its choosing.
International Banking License
A commercial bank with international banking authorization is permitted to conduct banking business operations both inside and outside of the States of the Federation, subject to the Central Bank’s approval of its choice-based offshore banking operation.
For instance, Access Bank, Guarantee Trust Bank, United Bank of Africa, First Bank of Nigeria, Zenith Bank, Union Bank of Nigeria, Fidelity Bank, and First City Monument Bank are a few examples of banks with an international license.
Citibank Nigeria Limited, Ecobank Nigeria Plc, Heritage Bank Limited, Keystone Bank Limited, Polaris Bank Plc, Stanbic IBTC Bank Plc, Standard Chartered Bank Limited, Sterling Bank Plc, Titan Trust Bank Ltd, Unity Bank Plc, and Wema Bank Plc are the only banks with national authorization, nevertheless. Globus Bank, SunTrust Bank, Providus Bank, and Parallex Bank Limited are regional license holders.
Obtaining a Commercial Bank License
The 3 stages for obtaining a license for banking business are;
- Grant of approval in principle
- Grant of a final license
- Pre-commencement of operation requirements
Grant of approval in principle
Submit a formal application for the grant of a license. Application is addressed to the Governor Central Bank of Nigeria. The application should be accompanied by the following documents;
- A feasibility report of the proposed Bank;
- A draft copy of the Memorandum and Articles of Association of the proposed Bank;
- A list of the shareholders, directors, and principal officers of the proposed Bank and their
- particulars;
- The prescribed application fee; and
- Such other information, documents and reports as the CBN may, from time to time specify.
After the applicant has provided all such information, documents and reports as CBN may require, the shareholders of the proposed bank shall deposit with the Bank a sum equal to the minimum paid-up capital. Upon the payment of the sum, the Governor may issue a license with or without conditions or refuse to issue a license.
Requirements for the Grant of Final License
Not later than 6 months after the grant of Approval in Principle, the promoters of the proposed bank must submit an application for the grant of a final license with the following documents:
- Prescribed licensing fee
- 3 certified true copies of Certificate of Incorporation of the Bank, Memorandum and Articles of Association, Form CAC 2 (Allotment of shares) and Form CAC 7 (Particulars of Directors) of the Bank;
- Evidence of the location of head office/branch building for the take-off of banking business;
- Evidence of strong room, loading bay and banking hall facilities;
- Bullion lorries with necessary security gadgets;
- Evidence of installation of I.T. facilities/computerization;
- Copies of letters of offer and acceptance of employment in respect of the management team
Pre-commencement of operations requirements
Where the proposed bank has been granted a final license for banking business, it will submit the following documents prior to commencement of business informing CBN of its readiness to commence operation;
- Evidence of admission into the clearing house;
- Copy of Shareholders register;
- Copy of share certificate issued to each investor;
- A draft copy of the opening statement of affairs signed by the directors and auditors;
- Evidence of insurance coverage and the insurance policies;
- Evidence of readiness of cheques and other security documents;
- Minutes of Pre-Commencement Board Meeting;
- Evidence of adequate security arrangements.
In accordance with the Banks and other Financial Institutions Act, banks must have a current license from the CBN in order to legally operate in Nigeria. All corporate governance standards that may be mandated by the CBN and other pertinent regulatory bodies in Nigeria must be complied with by the banks or licensees.
You can find more information about getting a CBN license below. and if you need help you can contact us for legal consultation
https://www.cbn.gov.ng/OUT/CIRCULARS/BSD/2005/REQUIREMENTS%20FOR%20NEW%20BANKING%20LICENSE.PDF
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