The Central Bank of Nigeria (CBN) has issued a new rule shaking up the banking industry, with many of the chairmen affected.
According to the new rule, bank executive directors (EDs), deputy managing directors (DMDs), managing directors (MDs), and non-executive directors (NEDs) can only serve a cumulative tenure of 20 years across the banking industry.
The directive is contained in a circular addressed to all deposit money banks (DMBs), signed by Chibuzor Efobi, director of financial policy and regulation department, CBN, and seen by TheCable.
The circular was a revision of the regulatory requirements for the tenure of executive management and non-executive directors of DMBs and financial holding companies in the Code of Corporate Governance for Banks and Discount Houses.
CBN said the tenure review was part of measures aimed at strengthening governance practices in the banking industry.
“The tenure of executive directors (ED), deputy managing directors (DMD) and managing directors (MDs) shall be in accordance with the terms of their engagement approved by the board of directors of banks, subject to a maximum tenure of ten (10) years,” the apex bank said.
“Where an executive who is a DMD becomes the MD/CEO of a bank or any other DMB before the end of his/her maximum tenure, the cumulative tenure of such executive shall not exceed twelve (12) years.
“However, for an executive (ED) who becomes a DMD of a bank or any other DMB, his/her cumulative tenure as ED and DMD shall not exceed 10 years.
“Non-executive directors (NEDs), with the exception of independent non-executive director (INED), shall serve for a maximum period of twelve (12) years in a bank, broken into three terms of four years each.
“EDs, DMDs and MDs who exit from the board of a bank either upon or prior to the expiration of his/her maximum tenure, shall serve out a cooling-off period of 1 year before being eligible for appointment as a NED to the board of directors.
“NEDs who exit from the board of a bank either upon or prior to the expiration of his/her maximum tenure of 12 years (three terms of four years each), shall serve out a cooling-off period of 1 year before being eligible for appointment to the board of directors of any other DMB.”
CBN added that the above tenure requirements shall apply “effective the date of this circular”.
The implementation of the new rule will see the exit of many top bank executives in Nigeria like, Zenith Bank’s, Jim Ovia, UBA’s Tony Elumelu, Access Bank’s Hubert Wigwe, and GT Bank’s Segun Agaje.
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