The Central Bank of Nigeria on Thursday unveiled guidelines for operating a Holding Company (HoldCo). Initially introduced in 2010, HoldCo structure enable banks or banking groups to retain non-core banking businesses by evolving into a non-operating structure
The apex bank in a circular posted on its website stated that the provisions were designed to strengthen governance structure of HoldCos. Part of the guidelines stated that the board of a HoldCo shall include at least an individual who is well-versed in the practice and theory of each segment of the companies within the Group.
It further stated that appointment to the board and management positions would be in line with the requirements of the Approved Persons Regime or any other regulation issued by the CBN from time to time, while regulations on the disqualification of board and management currently applicable to banks would be applied to HoldCos.
The bank also stated that changes in ownership and control of a financial holding company would be subject to the prior approval of the CBN as well as any conditions incidental to such approval.
“Prior approval of the CBN shall be obtained for any shareholding of five per cent and above in a financial holding company. Subsidiaries of a financial holding company or their partners shall be prohibited from acquiring shares in the financial holding company.
“Subsidiaries are prohibited from acquiring shares of other subsidiaries of their parent holding company. Where a financial holding company loses its controlling interest in the only banking subsidiary in the group, for a period that exceeds six consecutive months, the financial holding company shall cease to be a financial holding company and will be required to return its licence to the CBN.”
