STATEMENT OF ACCOUNTING STANDARD NO. 10: ON ACCOUNTING BY BANKS AND NON-BANK FINANCIAL INSTITUTIONS (PART 1)

WAIVER OF THE PROVISIONS OF PARAGRAPH 55 FOR 2009 FINANCIAL YEAR ONLY

The Governing Council of the Nigerian Accouting Standards Board (NASB) hereby announces the waiver of the provisions of paragraph 55 of Statement of Accounting Standard (SAS) No. 10: Accounting by Banks and Non-Bank Financial Institutions (Part 1) for financial statements ending on or before December 31, 2009 only.

The said paragraph states that "Banks should make general loan loss provisions of at least 1% of risk assets not specifically provided for, in addition to specific provisions, to provide against the as yet unidentified losses which are known to exist in any portfolio using a systematic method which should be consistently followed from period to period."

The waiver of the requirement of one percent  general provision for performing loans for banks was necessitated by a request from the Central Bank of Nigeria (CBN).

In approving the request, the governing council of the NASB relied on CBN's explanation of the recently concluded special examination of Deposit Money Banks by the CBN?Nigeria Deposit Insurance Corporation (NDIC) which ensured that full provisions were made for all impairments by banks on a case by case basis.

The NASB wishes to emphasize that this waiver is strictly for financial statements ending on or before December 31, 2009 only.