Banks not allowed to pay dividends from FX revaluation grains – CBN

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The Central Bank of Nigeria (CBN) has reiterated that banks are not allowed to use their foreign exchange revaluation gains for dividends or operational expenses.

A recent circular from the CBN signed by Adetona Adedeji, the Acting Director of the Banking Supervision Department, reaffirmed this directive.

It read: “Further to our letter dated September 1, 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 FCY revaluation gains as a counter-cyclical buffer to cushion any adverse movements in the FX rate.

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

This decision follows a previous instruction in September, where Deposit Money Banks were instructed to refrain from using gains from foreign exchange revaluation for dividends and operational costs.

The CBN’s directive, as outlined in a letter dated September 11, 2023, from the Director of the Banking Division Department at that time, Haruna Mustafa, is to be implemented immediately.

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