The Board of the Central Bank of Nigeria has finally fixed a maximum tenure of ten years for Managing Directors and Chief Executive Officers of banks in Nigeria. This new decision came as CBN hands off the negotiation and sales of the eight rescued banks to the banks management and boards who could negotiate, where desirable, with new foreign investors.
The CBN said the new directive on maximum tenure of ten years bank is to enthrone good corporate governance in the banks and ensure that institutions are not personalised.
It will be the first time that the tenure of bank chief executive is clearly defined and fixed.
The Director of Banking Supervision, Chief Samuel Oni who disclosed the new guideline at press conference held shortly after the Bankers Committee meeting said that bank chief executives are now to spend five years first tenure in office which is renewable for another five years time subject to good performance.
With the new directive all chief executive officers of the banks who had served more than ten years prior to the coming of this new regulation would leave office and handover by July 31, 2010. They are further urged to begin preparation for handing over.
Chief Oni said: “All CEOs who would have served for ten years by July 31, 2010 shall cease to function in that capacity and shall hand over to their successors. The banks are expected to have a credible succession programme that would be supervised by the board and monitored by the CBN
“Where a bank is a product of a merger, acquisition, takeover or any other form of combination, the ten year period shall include the pre and post combinations service years of the CEOs, provided that the bank in which he previously served as CEO was part of the new bank that emerged after he combination.
The Director Banking Supervision also added that “to ensure sound corporate governance a bank chief executive that resigned after spending the maximum ten years in office shall not be eligible for appointment in the bank or in any of the bank’s subsidiaries until after three years of his/her exit from office as CEO.”
To prevent abuse of office, the Past CBN governors and their deputies including the Managing Director of the Nigeria Deposit Insurance Corporation [NDIC] shall not be eligible to take appointment in any capacity in any of the banks until after five years of leaving office while directors in CBN and the NDIC shall not be eligible for appointment in any capacity in the banks until after three years of leaving office.
Meanwhile in another development the Central Bank of Nigeria [CBN] has handed off the negotiation and sales of the eight rescued banks to the banks management and boards who could negotiate, where desirable, with new investors.
The Director of Banking Supervision in CBN, Chief Samuel Oni disclosed that following a meeting held with the management and key shareholders of the rescued banks recently, it was unanimously agreed that the apex bank should leave the driver’s seat of those to negotiate the sales of the banks for the management and board of the affected banks. He said the CBN which would be a mere facilitator in the whole sales process, had appointed financial advisors for the rescued banks to flag off the process of recapitalization.
To ensure that the banking system is effectively supervised, the CBN director said the apex bank had come out with a minimum information disclosure policy which would start with the banks 2009 Annual Financial Reports.