The CBN had last week expressed concerns over the escalating
foreign currency exposure of banks through their Net Open Positions.
Consequently, it issued a circular titled, ‘Harmonisation of
Reporting Requirements on Foreign Currency Exposures of Banks,’ directing
lenders to sell all excess dollar stocks to their customers.
In the circular, the CBN stipulated that the NOP limit for
overall foreign currency assets and liabilities should not exceed 20 per cent
short or zero per cent long of shareholders’ funds.
Reacting on Monday, BDAN said it was fully aware of the CBN
circulars which it said were aimed at fortifying the nation’s financial system.
“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 in a statement by
its Chairman, Board of Directors, Mustafa Chike-Obi, on Monday.
Following the CBN directive, dollar supply rose by 180 per
cent to $440m at the official foreign exchange market (NAFEM).
Reacting, BDAN said, “This directive, along with other
prudential requirements outlined in the circular, plays a critical role in
ensuring the effective management of foreign currency exposures”.
According to the central bank circular, the CBN aims to
mitigate potential losses that could pose significant systemic challenges.
These regulatory measures, it was said, “underscore a
strategic initiative aimed at bolstering risk management, transparency, and
accountability within the financial industry.
“The Bank Directors Association of Nigeria 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 disclosed that it viewed the requirements as a positive
step towards creating a resilient financial landscape and preventing adverse
effects on the banking sector.
The statement further read in part, “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.
“Therefore, the association encourages 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 consulting 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.”
While pledging its support for the apex bank, BDAN said the
steps being taken were in the right direction.
“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,”
it submitted.