The Central Bank of Nigeria (CBN) will from September this year operate a risk-based supervision of local banks, with the aim of focusing its attention on the riskier institutions.
The Deputy Governor of the central bank said the new model was necessitated by the fact that the recently consolidated Nigerian banking industry – the introduction of a minimum capital requirement has reduced the number of banks in the country to just 25 – will have to take on greater risks in pursuit of higher profits.
“It is a major shift from the rigid rules/compliance-based supervisory and regulatory approach to one, which seeks to encourage a bank to develop and continuously update its internal management systems,” says a spokesman for Standard Bank of South Africa, which provides a sub-custody service in Nigeria.