Firstly, since independence in 1960, the Nigerian political system has been unstable, there have been 7 military coups and this has made the investment climate unattractive because the nation appears unsafe for foreign investor investors. Second, there are too many arbitrary and sudden changes in government policies and regulations that have led to a great deal of uncertainty. Foreign banks are afraid to finance any project with a long gestation period. With this fear, most of these banks are now turning to large cash centers, i.e. they are basically involved in deposits and disbursement of funds without being involved in financing long-term projects. Third, corruption is endemic and has spread to every aspect of the banking system. economy. There is a widespread belief among many governments, public bodies and foreign banks that business operations could grind to a halt if their hands are not greased. Another important finding is that of the weak legal system, the legal system also had its deficits resulting from the interference of the executive in their affairs. Those who have contravened the laws are not easily reported, those involved in unfair business practices or breaches of contractual agreements are not adequately prosecuted to act as a deterrent to others. Based on this, most foreign banks tend to worry about the validity and enforcement of contractual agreements. Foreign banks require a healthy private sector that can earn a reasonable rate of return in a stable economic environment, that is, when the private sector is healthy, this is a good indicator to the foreign investor that the economy is stable, thriving and it can be a good investment opportunity. The government is too involved in regulatory approvals. None is even left in the hands of the private sector through organized bodies, as in the case of the UK through the Financial Service Authority (FSA). The FSA regulates both prudential aspects and the conduct of business. It is financed by the industry levy and governed by a supervisory board. This supervisory board is made up primarily of people from the financial sector, not necessarily from the government Llewellyn (2000). 5.2 CONCLUSION For any economy to be measured by international standards, there must be the presence of some foreign banks, the Nigerian economy has witnessed such presence. However, some of these banks tend to vary from time to time and from region to region. The research analysis highlighted the challenges facing foreign banks in Nigeria.