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  • Business - Banking & Finance
  • Updated: March 15, 2024

CBN warns banks against paying dividends with FX revaluation gains

CBN warns banks against paying dividends with FX revaluation

The Central Bank of Nigeria, CBN, has warned commercial banks in the country against using their foreign exchange revaluation gains to pay dividends or meet operational expenses. 

This was disclosed in a circular on Thursday by the acting Director of the Banking Supervision Department, Adetona Adedeji.

It warned banks against using their FX revaluation gains to pay dividends and other operational costs.

“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.

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

Forex revaluation gains occur when there is an increase in the value of a bank’s assets and liabilities denominated in foreign currency due to a change in the exchange rate between the foreign currency and the local currency.

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