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The Central Bank of Nigeria (CBN) yesterday clarified areas of misunderstanding on the full disclosure requirement by banks.

The Governor of the CBN, Sanusi Lamido Sanusi had on assumption of duty last June made Full Disclosure by banks one of his four-point agenda.

Subsequently, the concept became a subject of interpretation by internal and external auditors of banks as well as regulatory organs such as the Securities and Exchange Commission (SEC), the Nigerian Stock Exchange (NSE) and the Nigerian Accounting Standards Board (NASB) among others. The development led to different interpretations of the purposes and requirements for full disclosure. According to the clarifications on the policy as posted on the CBN website yesterday and titled: “The CBN’s Disclosure Requirement for Banks: The Facts,” the apex bank stated that the full disclosure requirement is a the mandatory financial, operational and management information, which financial institutions are required to disclose in the rendition of their periodic returns to the regulatory authorities and the public.

It added that the process has to do with ensuring the integrity of data in the rendition of reports to the supervisory authority and the public in order to enable them ascertain the true financial position and performance of deposit money banks.

“The objectives of introducing the full disclosure requirements are essentially to provide economic agents and other stakeholders with appropriate information to assist them in evaluating the financial positions and performances of banks and to enable them obtain better understanding of unique characteristics of the operations of banks,” the apex bank further stated. According to the CBN, the provision of adequate information enhances the integrity of banks and reduces the reputational risks that could lead to loss of confidence and patronage.

It stated it will also help to reduce market uncertainty and limit the risk of unwarranted contagion adding that the effort of the CBN at enhancing the current regime of information disclosure by banks will help to further promote market discipline. Obviously the banks, said the CBN, will be better off with full compliance and implementation of the additional disclosures since the merits of full disclosures far outweigh the demerits.

“The banking sector, like every other segments of the financial system thrives on trust and confidence. The full disclosure option will assist all stakeholders to evaluate the true and fair positions of the banks and confidently take informed decisions about them. The issue of de-marketing among the banks would have been systematically and permanently addressed.

“The intention of the CBN is to provide users, including investors and depositors, with requisite information to enable them evaluate the financial position, performance and operations of banks. The measure is in tandem with best practice and in pursuant for the attainment of the world acclaimed requirements of BASEL 11and International Financial Reporting Standards (IFRS)” it further stated.