BDAN backs CBN’s limit on banks’ foreign currency exposure

The Bank Directors Association of Nigeria (BDAN) on Monday said it is in support of the Central Bank of Nigeria (CBN) limit on banks foreign currency exposure, stating that the directive, along with other prudential requirements outlined in the circular, plays a critical role in ensuring the effective management of foreign currency exposures

The apex bank in a circular last week said the Net Open Position (NOP) limit of banks’ overall foreign currency assets and liabilities both on and off-balance sheet should not exceed 20 per cent short or zero per cent long of shareholders’ funds unimpaired by losses using the gross aggregate method.

CBN in a circular to all banks, titled ‘Harmonisation of Reporting Requirements on Foreign Currency Exposures of Banks’ was jointly signed by Hassan Mahmud, director trade and exchange department of the CBN and Rita Ijeoma Sike, for director, banking supervision department.

BDAN in a statement signed by its Chairman, Board of Directors, Mr. Mustafa Chike-Obi said it is fully apprised of the recent Guidelines/Circulars issued by the CBN, aimed at fortifying the nation’s financial system.

According to him,  “The Association wholeheartedly supports these comprehensive measures which underscore the commitment of the CBN to ensuring the stability and resilience of the Banking sector.

“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 mi􀆟gate potential losses that could pose significant systemic challenges.

“These regulatory measures underscore a strategic initiative aimed at bolstering risk management, transparency, and accountability within the financial industry. The 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 crea􀆟ng 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.”

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

“Furthermore, the Association acknowledges the meticulous work undertaken by the Central Bank of Nigeria in consul􀆟ng stakeholders and experts to ensure a balanced and effective regulatory approach.

“As advocates for responsible Banking and ethical conduct, BDAN believes that these guidelines will contribute significantly to the long-term sustainability, growth, as well as the overall efficiency, transparency, and stability of the Banking sector, ultimately contributing to the nation’s economic development.

“BDAN pledges its continuous collaboration with the Central Bank of Nigeria and other stakeholders to foster a dynamic and resilient financial ecosystem that serves the interests of all Nigerians. We believe that these steps are in the right direction to improve the effectiveness of the Banking system and we are fully in support,” Chike-Obi statement added.