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The Central Bank of Nigeria (CBN) on Tuesday approved the establishment and operation of subsidiaries and Special Purpose Vehicles (SPVs) by Development Finance Institutions (DFIs).
The move is in furtherance of operational objectives of the sub-sector.
In a circular/letter to all DFIs signed by Tokunbo Martins, director, Other Financial Institutions Supervision Department (OFISD), the CBN said it is important that DFIs are transparent in their financial reporting and remain focused on their core objectives.
Part of the circular reads: “In this regard, DFIs are henceforth required to provide comprehensive disclosures on all subsidiaries and SPV operations. In the same vein the same regulatory standards that apply to the parent DFI will apply to the subsidiaries and/or SPV”.
Consequently, the DFIs are required to submit returns on all SPVs including details of ownership, corporate governance structure, statements of assets and liabilities, income and expenditures, project(s) status possible risk exposure and mitigants along with own regulatory returns.
They are also report on the financial soundness indicators/prudential ratios of the DFI calculated on a solo and consolidated basis, present for approval, its audited accounts along with that of the SPVs on a consolidated basis, and meet a consolidated leverage ratio of at least 10 percent Common Equity: Total Assets(On and Off-Balance Sheet Inclusive).
HOPE MOSES-ASHIKE
