The Central Bank of Nigeria (CBN) has released the final version of the regulatory framework for bank holding companies (holdcos) as it moves to address preconditions set by Pension Commission (Pencom) for lifting prohibition on Pension Fund Administrators (PFAs) from buying stocks of banks running as holdcos.
The banking sector regulator released the guidelines, which basically addressed the requirements of PenCom with regards to the holdcos on Friday.
Pencom had over a year ago stopped PFAs from buying bank holdcos. This affected three banks – FBNH, FCMB and Stanbic-IBTC.
Pencom insiders say tha that the commission took that step because there was no CBN framework for regulating the holdcos and the holdcos were not up to five years old as stipulated in the Pension Reform Act 2004.
This meannt that two pre-conditions must be met before Pencom gets into a position to lift the prohibition on purchase of bank holdcos by PFAs.
One was the amendement of Pension Reform Act 2004, which has been effected with the release of the officially gazetted copy of the Pension Reform Act 2014, which removed the five-year dividend declaration and payment requirement.
The second condition, which stipulated that the CBN must issue final regulatory framework for bank holdcos was alaso address when the regulator circulated the draft regulatory framework to stakeholders for review and feedback, which has ultimately culminated in the new guidelines.
Industry watchers believe that with the two pre-conditions now satisfied the onus has shifted to Pencom to issue a circular lifting the prohibition to make it possible for PFAs to buy bank holdcos.
An an analyst from one of the country’s top broking firms, Renaissance Capital, described the issuance of the guidelines as very cruccial both to the affects banks and the indsutry as a whole “considering the attractive upside potential in FBNH and FCMB at the moment. Furthermore, the fact that most banks are in capital raising mode makes it imperative that the prohibition is lifted, as access to pension funds will be critical to the success of the capital raising efforts.”
Our attempts to reach the spokesman of PenCom, Emeka Onuorah, for the reactions of the commission proved abortive, but an informed source in the commission said that the pension regulator was studying the development and would make its stand public before long.