By Elizabeth Adegbesan
The Central Bank of Nigeria, CBN, has banned closely linked financial entities from extending loans or guaranteeing the obligations of one another without the bank’s prior approval.
The apex bank disclosed this, yesterday, in its Exposure Draft on ring-fencing operations of closely linked entities in the Nigerian financial system.
The apex bank stated: “Except with the prior written approval of the CBN, no closely linked entity shall extend a loan to, or guarantee the obligations of another.”
The guidelines also outlines measures to address different licence categories; mitigate risks from the co-mingling of customer funds with those of closely linked entities; provide additional governance requirements for closely linked entities; and support orderly resolution of distressed closely linked entities.
The guidelines stated, among other key principles, that closely linked entities shall operate independently and shall maintain adequate level of capital and l
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