THE banking industry was thrown into a state of complete jittery, Friday as the Central Bank of Nigeria (CBN) reviewed the tenure of Executive Management and Non-Executive Directors of banks and other financial institutions.
The review notice was contained in a communique issued by the apex bank’s Director of the Financial Regulation Department of Chibuzo Efobi sighted by News Point Nigeria.
News Point Nigeria learnt that the move is to strengthen governance practices in the banking sector.
“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 circular read.
A source in the CBN, who spoke to News Point Nigeria on condition of anonymity stated that, quite a number of the executive directors and non-executive directors have overstayed their tenures.
“There is going to be a clean up as the CBN is aware of a lot of these directors, who have actually over stayed their tenure and those DMDs, who became MDs before their time”, the source stated.
“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”, the communique added.
“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 (3 terms of 4 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.
“The cumulative tenure limit of EDs/DMDs, MDs, and NEDs across the banking industry is 20 years.”
The bank said the circular takes effect from 24th February 2023.