26.1 C
Monday, July 22, 2024

Bureau De Change operators contemplate mergers amid proposed regulatory overhaul

Central Bank's Stringent Guidelines Prompt Currency Traders to Weigh Consolidation Strategies

Must read

Aminu Gwadebe, President of the Association of Bureau De Change of Nigeria, has signaled potential mergers among members if stringent proposed guidelines for their operations materialize, underscoring the escalating challenges facing currency traders in the country.

In response to the Central Bank of Nigeria’s draft paper titled ‘Revised Regulatory And Supervisory Guidelines For Bureau of Change Operations In Nigeria,’ Gwadebe expressed concern over the proposed increase in share capital to N2bn and N500m for Tier 1 and Tier 2 licenses, respectively. These figures represent a significant escalation from the previous N35 million general license fee.

Gwadebe emphasized the need for a grace period during which existing license holders can consolidate operations, fostering the creation of larger, more resilient entities amidst the proposed regulatory landscape.

He questioned the rationale behind the suggested cautionary deposits, labeling them as excessive and divergent from global norms, particularly considering that Bureau De Change operators do not engage in deposit-taking activities akin to traditional banks.

Gwadebe highlighted the imperative for comprehensive stakeholder engagement, indicating that the association’s over 5,000 members would convene at zonal levels to deliberate on the CBN’s proposals and formulate a unified industry stance.

Meanwhile, some BDC operators, like Ibrahim Yahu and Demola Muyiwa, have begun exploring avenues to bolster their capital reserves to comply with the proposed regulations. However, many anticipate challenges in meeting the stipulated requirements and envisage mergers as a potential solution to ensure regulatory compliance.

Gwadebe also revealed ongoing discussions with the CBN to facilitate the legal reinstatement of BDC operations in Nigeria, signaling a potential reprieve for traders following the ban imposed in July 2001 to stabilize the local currency.

Financial analyst Segun Aremu cautioned that while the CBN’s interventions might yield short to medium-term benefits for the Nigerian currency, long-term sustainability hinges on a delicate balance of regulatory measures and market dynamics.

More articles


Please enter your comment!
Please enter your name here

Latest article