The Central Bank of Nigeria, CBN, has granted American financial services giant JP Morgan approval-in-principle to establish a merchant bank in the country.
The proposed lender, to be known as JPMorgan Merchant Bank Nigeria Limited, will, however, require a final banking licence from the apex bank before commencing operations.
The CBN disclosed this in a statement on Friday, marking a significant step in the expansion of the global bank’s operations in Africa’s largest economy.
The approval comes weeks after JP Morgan announced plans to establish a merchant banking subsidiary in Nigeria as part of efforts to deepen its presence in the country’s financial services market.
Dapo Olagunju, managing director of JP Morgan West Africa, announced the plan on October 8 at the Nigeria-Asia Financial Connectivity Dialogue in Singapore, convened by the CBN in collaboration with JP Morgan, the Nigerian Exchange Group and FMDQ Group.
The proposed bank is expected to strengthen JP Morgan’s capacity to serve Nigerian businesses, financial institutions and other corporate clients, particularly in areas requiring access to international capital markets.
JP Morgan currently operates a representative office in Lagos, through which it has maintained its presence in Nigeria’s financial market.
A fully licensed merchant banking subsidiary would allow the lender to expand its activities beyond its existing representative-office operations, subject to the scope of the licence and applicable regulatory requirements.
The bank has over the years advised Nigerian governments and companies on international financial transactions, including Eurobond issuances.
Earlier this week, reports said JP Morgan had deposited N50 billion with the CBN as part of the requirements for securing a merchant banking licence.
The amount corresponds to the minimum paid-up capital requirement for nationally licensed merchant banks under the CBN’s banking recapitalisation framework.
According to reports by Bloomberg and Nigerian financial news outlets, the deposit was one of the key regulatory requirements in the bank’s application process.
The approval-in-principle represents a further step towards establishing the proposed subsidiary, although the bank must still satisfy the CBN’s requirements for a final licence before it can begin operations.