By Elizabeth Adegbesan  

Ahead of the dividend payment season, the Central Bank of Nigeria, CBN, has directed banks to strictly comply with recent foreign exchange (FX) policy reforms.

Part of the policy was aimed at restricting banks from using the foreign exchange gains to pay dividend to shareholders.

Recall that the apex bank   last year emphasized on the need for prudent financial management and risk mitigation thereby directing banks to exercise utmost prudence and set aside foreign currency revaluation gains as a counter-cyclical buffer to cushion any adverse movements in the foreign exchange rate.

In a letter addressed to banks yesterday, and signed by the Acting Director, Banking Supervision, Dr. Adetona Adedeji, the apex bank stated: “Further to our letter dated September 11, 2023, referenced BSD/DIR/CON/LAB/16/020 on the above subject, the Central Bank of Nigeria wishes to reiterate that banks are required to exercise utmost prudence and set aside Foreign Currency (FCY) revaluation gains as a counter-cyclical buffer to cushion any adverse movements in the FX rate.

“In this regard, banks shall not utilize such FX revaluation gains to pay dividends or meet operating expenses.”