The Central Bank of Nigeria (CBN) has granted preliminary approval to global financial services giant JPMorgan to establish a merchant bank in Nigeria. This move could strengthen the country’s financial markets and attract more international investment.
The proposed bank to be known as JPMorgan Merchant Bank Nigeria Limited has received Approval-in-Principle (AIP) from the apex bank. However it must meet further regulatory requirements and obtain a final operating licence before it can begin business.
The development comes as the CBN pursues reforms to strengthen the banking system improve confidence in the financial sector and increase Nigeria’s participation in international capital markets.
The approval also follows the completion of the banking sector recapitalisation exercise which was designed to strengthen banks’ financial capacity and improve their ability to withstand economic shocks.
In a statement on Friday the CBN said the proposed entry of one of the world’s leading financial institutions into Nigeria’s merchant banking sector reflected growing international interest in the country’s financial markets and long-term economic prospects.
Speaking on the development CBN Governor Mr Olayemi Cardoso said the apex bank was working to build a financial system that can attract investment and support economic growth.
‘Our objective is to build a financial system that is stable competitive and internationally connected one that commands confidence and can effectively support investment and economic growth’ he said.
Cardoso said the CBN was encouraged by growing interest from international financial institutions in Nigeria adding that the bank would continue implementing reforms to improve the credibility of the country’s financial markets.
‘Our focus remains on sustaining the reforms strengthening the credibility of our markets and creating an environment in which both domestic and international institutions can participate and thrive’ the governor said.
The approval is expected to strengthen the presence of international financial institutions in Nigeria’s banking industry. However the actual impact will depend on the proposed bank’s eventual operations and the services it provides.
Merchant banks generally provide financial services to businesses governments and institutional clients. Their activities may include corporate financing investment advisory services capital raising and other specialised financial services subject to the applicable regulatory framework.
The CBN’s approval of JPMorgan’s proposal is however not a final banking licence. The Director of the CBN’s Corporate Communications and Investor Relations Department Mr Michael Akuka said the AIP was only the first stage of the regulatory approval process.
He explained that JPMorgan Merchant Bank Nigeria Limited must meet all relevant requirements including registering with the Corporate Affairs Commission and completing necessary operational and regulatory arrangements before the CBN can permit it to commence business.
The proposed bank can begin operations only after the apex bank issues its final licence.
As part of the approval process the CBN has approved the nomination of Mr Adedapo Adedayo Olagunju as managing director of the proposed institution.
The apex bank also approved Latter Kevin George Nzelu Chinedum Izunwanne and Syed Gabriel Murtaza as non-executive directors.
In addition the bank approved Alade Sarah Omotunde Ajayi Olukonyinsola and Adetu Seni as independent non-executive directors.
The appointments form part of the proposed bank’s leadership structure subject to the applicable regulatory requirements.
The development comes amid the CBN’s efforts under Cardoso to strengthen the financial system improve market confidence and expand Nigeria’s links with global financial markets.
The banking sector recapitalisation exercise is a key part of these efforts as it seeks to ensure that banks have stronger capital bases to support lending finance businesses and withstand financial pressures.
The proposed establishment of JPMorgan Merchant Bank Nigeria Limited could provide another channel for Nigerian businesses and other eligible clients to access specialised financial services. Its entry would also add to the range of institutions operating in the country’s financial services market.
The apex bank said it remained committed to maintaining a sound competitive financial system that supports sustainable economic growth while deepening Nigeria’s participation in global financial markets.