CBN limits bank MD/CEO tenure to 12 years, reviews relative appointments

The Central Bank of Nigeria (CBN) has stipulated a maximum of 12 years as the tenure of a bank’s managing director or chief executive officer (CEO).

In a circular dated July 13, 2023, but obtained on Saturday, the CBN also stated a maximum of 12 years tenure for the position of deputy managing director and executive director (ED) of a bank.

The tenure review is part of a new code of corporate governance issued to banks in the circular signed by CBN’s director for financial policy and regulation department, Chibuzo Efobi.

According to the financial regulator, the review, which takes effect on August 1, 2023, also stipulated that in the case an executive director becomes a deputy managing director, 12 years is the cumulative tenure.

However, “Where a DMD/ED becomes an MD/CEO of the same bank, his/her previous tenure as DMD/ED is not included in computing his/her as MD/CEO,” the circular stated.

The CBN further stated that: “Where a merger, acquisition, take-over, or any form of business combination involves the appointment of a director from the board of the legacy institution, the length of service of such director shall include both the periods served pre and post combination.”

Before the exit of an MD/CEO, other EDs and senior management staff, the apex bank directed the board of banks to “approve a succession plan for the MD/CEO, other EDs and senior management staff, which shall be reviewed at least once every two years,” CBN noted in the statement.

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Also, the financial regulator clarified that the “Remuneration of MD/CEO, DMD, and EDs shall be linked to performance and structured to prevent excessive risk taking.”

On having relatives on the board of a bank, the CBN warned that not more than two members of an extended family should be on the board, adding that, “Only one member of an extended family can occupy the position of MD/CEO, chairman or ED at any point in time.”

Meanwhile, the CBN directed that a minimum of seven and a maximum of 15 directors should be on the boards of commercial, merchant and non-interest banks (CMNIBS).

It, however, limited the maximum number of directors on the board of a payment service bank (PSB) to 13, while the minimum is seven.

The board was given the responsibility to appoint MD/CEO, executive directors as well as senior management staff, subject to its approval.

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