CBN Warns DFIs On Approval Request for Subsidiaries, SPVs
By UMORU ABDULKADIR
The Central Bank of Nigeria (CBN) has warned Development Finance Institutions (DFIs), on their requests for special regulatory approvals to establish and operate Special Purpose Vehicles (SPVs)
According to a letter signed by the Director, Other Financial Institutions Supervision Department, Mrs. Tokunbo Martins to DFIs, and posted on its website, CBN said in order to ensure that DFIs are “transparent in their financial reporting and remain focused on their core objectives, they must henceforth provide comprehensive disclosures on all subsidiaries ans SPVs operations.”
The CBN also emphasised that “the same regulatory standards that apply to the parent DFI will apply to the subsidiaries and/or SPV.”
The Apex bank further stressed that henceforth, DFls are required to “submit returns on all SPVs including details of ownership, corporate governance structure, statements of assets and liabilities, income and expenditures, project{s) status, possible risk exposure and mitingants, along with own regulatory returns.
“Report on the financial soundness indicatorsIprudential ratios of the DFI calculated on a solo andconsolidated basis.
“Present for approval, its Audited accounts along with that of the SPVs ,on a consolidated basis” and “Meet a consolidated leverage ratio of at least 10 per cent [Common Equity: Total Assets {On and Off-BalanceSheet inclusive) at all times.”
In addition, the CBN informed DFIs that “approval of new SPVs shall depend on the successful performance of earlier approved ones and the meeting of the consolidated prudential ratios, leverageratio and business objectives at all times.”
While emphasizing that “a consolidated risk-based examination of all subsidiaries and/or SPVs will be conducted on a periodic basis,” the CBN warned that any DFI that fails to comply with the new directives would be appropriately sanctioned.
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