HOW TO START AN INTERNATIONAL COMMERCIAL BANK IN NIGERIA?

It should interest you to know that many banks in Nigeria, such as First Bank, Access Bank, and Zenith Bank, not only provide banking services within Nigeria but also in other countries.  That is the idea behind an international commercial bank.

We already know what a bank does, such as keeping money safe, giving loans, and supporting businesses. But an international commercial bank goes further. Meaning that, it is authorised to conduct banking business on an international basis.

Building on this, this type of bank creates a strong business opportunity because many Nigerian businesses carry out business internationally, and a huge amount of money moves in and out of the country every day, thereby making this type of bank a gateway for cross-border business transactions.

However, establishing such a bank in Nigeria requires a huge amount of start-up capital, strict compliance with the Nigerian banking laws and approval from the appropriate regulatory authority.

With this in mind, this article will break down in simpler terms what a commercial bank is, what an international commercial bank is and how to start an international commercial bank in Nigeria.

What is an International Commercial Bank?

An International Commercial Bank is entitled to carry on its banking business operations within all the States of the Federation, as well as to establish and maintain offshore banking operations in jurisdictions of its choice, subject to the approval of the CBN and compliance with the regulatory requirements of the host country. Examples of licensed International Commercial Banks are First Bank, Access Bank, Zenith Bank, etc.

Permitted Activities for International Commercial Bank

The following are permissible activities of an International Commercial Bank;

1. a) Take deposits and maintain current and savings accounts from natural and legal persons; Permitted Activities for Commercial Banks
2. b) Provide retail banking services, including mortgage products;
3. c) Provide finance and credit facilities;
4. d) Deal in foreign exchange and provide foreign exchange services, subject to the requirements of the Foreign Exchange (Monitoring & Miscellaneous Provisions, etc) Act, Cap. F35 Laws of the Federation of Nigeria 2004, any other law and CBN Regulations made pursuant thereto;
5. e) Act as a settlement bank, subject to CBN approval;
6. f) Provide treasury management service,s including but not limited to the provision of money market, fixed income, and foreign exchange investment on behalf of clients, subject to the approval of the CBN;
7. g) Provide custodial services;
8. h) Provide financial advisory services incidental to commercial banking business which do not require regulatory filings with the Securities and Exchange Commission, such as: advising on financing and business strategies and structures, conducting research and economic intelligence services, building financial models, writing business plans, conducting private placements, arranging loan syndications and advising on project structures;
9. i) Invest in non-convertible debt instruments and, subject to CBN approval, enter into derivative transactions;
10. j) Undertake fixed income trading, where duly licensed to act as a Primary Dealer/ Market Maker to trade in securities such as Federal Government bonds, treasury bills, treasury certificates and such other debt certificates as may be prescribed by the CBN from time to time;
11. k) Provide non-interest banking services subject to CBN approval; and Such other activities as may be prescribed in writing by the CBN from time to time.

Prohibited Activities for International Commercial Bank

International Commercial Banks are prohibited from carrying out the following activities;

1. Insurance underwriting;
2. Loss adjusting services;
3. Re-insurance services;
4. Asset Management services;
5. Issuing House and Capital Market underwriting services;
6. Investment in equity or hybrid-equity instruments, except for the investments permissible under BOFIA;
7. Proprietary trading, save as permitted by these Regulations;
8. Provision of financial advisory services other than in accordance with provisions in Section 3(h); and
9. Any other business activities that may be restricted by the CBN from time to time

HOW TO START AN INTERNATIONAL COMMERCIAL BANK IN NIGERIA

Starting an international commercial bank in Nigeria requires securing a license from the Central Bank of Nigeria (CBN), which involves a three-stage process: Approval-in-Principle (AIP), registration with the Corporate Affairs Commission (CAC), and final licensing.

STEP 1 Minimum Capital Threshold: Applicants must meet the minimum paid-up capital threshold of 500 billion (five hundred billion naira) to get a license approval.

STEP 2 Pre-Application Stage: Applicants must submit a formal application to the CBN Governor, and the application shall be accompanied by a feasibility report, a business plan, details of the shareholders and directors, a draft Memorandum and Articles of Association, a non-refundable application fee of ₦500,000.00, and any other required documents.

STEP 3 Obtaining Approval-In-Principle (AIP): Upon approval of the application, the CBN issues an Approval-In-Principle (AIP), which allows the bank to register as a company and begin setting up its operation. The applicant must deposit the minimum paid-up capital of 25 billion with the CBN to obtain the AIP. The CBN will examine the application and may either grant an Approval-in-Principle (AIP) with or without certain conditions, or decline to issue the banking licence.

STEP 4 Incorporation: Upon obtaining the AIP, register the bank with the Corporate Affairs Commission

STEP 5 Final License: Within 6 months of the AIP, apply for the final license. To apply for the final license, the following documents are required:

1. Non-refundable licensing fee of 500,000,000 in bank draft payable to CBN
2. 3 copies each of: Certified true copy (CTC) of Certificate of Incorporation of the bank, CTC of MEMART, CTC of Forms CO2 (Allotment of shares) and CO7 (particulars of directors)
3. Evidence of suitable Head Office/Branch Building;
4. Details of the board and management team.

The CBN will assess the application and may grant the final banking licence.

STEP 6 Pre-Operational Requirement: Before starting operations, the bank must provide the CBN with additional required documents, including:

1. Proof of registration with the clearing house.
2. A copy of the shareholders’ register.
3. Copies of share certificates issued to each investor.
4. A draft of the opening statement of affairs, signed by the directors and auditors.
5. Evidence of insurance coverage for cash, including Cash-In-Transit (CIT), cash at the counter, and vault/strong room insurance policies.
6. A copy of the bank’s Operations Manual.
7. Proof of Cheque and other security documents
8. Minutes of the Pre-Commencement Board Meeting.
9. Evidence of sufficient security arrangements, both physical (guards, alarms, etc.) and digital (IT security systems).

Once all these documents are submitted, the Central Bank of Nigeria (CBN) will review them and, if everything is in order, grant approval for the bank to begin operations as an international commercial bank

Conclusion

Starting an international commercial bank in Nigeria is both a strategic business opportunity and a regulated process. Such banks play a crucial role in helping businesses trade globally, moving money safely, and supporting foreign investments. While the process requires substantial capital, proper documentation, and approval from the CBN, it opens the door to operating at the centre of major financial transactions. By learning the requirements, functions, and opportunities of international banking, investors can confidently plan, set up, and run a bank that bridges Nigeria with the global economy.

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