CBN Revises Tenure Limits for Bank Executives to a Maximum of 24 Years
The Central Bank of Nigeria has revised the tenure of executive directors (ED). Deputy managing directors (DMD), and managing directors (MDs) of Banks and Bank Holding companies.
According to the approved guidelines published by the Central Bank of Nigeria (CBN) on its website Friday, the cumulative tenure limit of directors (ED, DMD, MD, and NEDs) on the Board of the same bank is twenty-four years as against 20 years in the previous regulation.
This is contained in section 3 of the new Corporate Governance Guidelines for Commercial, Merchant, Non-Interest, and Payment Service Banks in Nigeria signed by the Director, Financial Policy and Regulation Department, Chibuzo Efobi, dated July 13, 2023.
The current guidelines contained in the issued circular entitled ‘Corporate Governance Guidelines’ take effect on August 1, 2023.
According to Section 3 of the guidelines the tenure of the MD/CEO of a bank shall be by the terms of engagement with the bank but subject to a maximum period of twelve (12) years.
The guidelines also provide for the tenure of the Deputy Managing Director (DMD) and Executive Director (ED).
It also stated that the tenure of a DMD/ED of a bank shall not exceed twelve (12) years.
However, where an ED becomes a DMD, a cumulative tenure of twelve (12) years applies and shall not be extended.
This means, if an ED who has served for 5 years is made DMD, they only have 7 years left to serve as DMD.
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 tenure as MD/CEO.
The guideline, however, stated that this is subject to a cumulative tenure limit of 24 years which was covered in Section 8 of the Guidelines.
Section 8 states that the cumulative tenure limit of directors (ED, DMD, MD, and NEDs) on the Board of the same bank is twenty-four years.
The new guidelines for tenures MDs, DMD, and ED of banks is a change from the recent policy in the February 24, 2023 circular which ‘dethroned’ some bank executives.
In that guideline, the tenure of ED, DMD, and MD was subject to a maximum of 10 years.
The new guidelines also touch on the Cooling Off period of bank executive directors stating that upon expiration of a maximum tenure, executive directors must serve out a cooling off of two years before being eligible for appointment as NED in the same bank subject to applicable tenure limits.
“An Executive (ED, DMD or MD/CEO) who exits from the Board of a bank either upon or before the expiration of his/her maximum tenure, shall serve out a cooling period of two (2) years before being eligible for appointment as a NED in the same bank, subject to applicable cumulative tenure limits.”
“Where an Executive (ED, DMD or MD/CEO) of a bank is appointed to the Board of its FHC in any role, a cooling-off period of two years shall apply”, the guidelines stated.
The guidelines also made provisions for Non-Executive Directors stating that they can serve for a maximum of 12 years comprising three terms of four years each.
The guidelines read: “NEDS (except INEDs) of a bank shall serve for a maximum of twelve (12) years comprising three terms of four years.
“To qualify as a NED in a bank, the proposed NED shall not be an employee of a financial institution except where the bank is promoted by that financial institution and the proposed NED is representing the interest of that financial institution.
“In the case of a commercial bank with a NIB window, at least one NED shall be knowledgeable and/or have experience in the field of Islamic finance or Islamic Commercial Jurisprudence.”
Independent non-executive directors also have a maximum of eight years not exceeding two terms of four years each.
Salient Times reported two days ago that the apex bank had revised the policy guideline of February 24, 2023, which sent some bank executives packing.
One of the beneficiaries of the latest policy shift is Ms Adaora Remy Umeoji, the former Deputy Managing Director (DMD) of Zenith Bank, who is eligible to return to her position as DMD which she had relinquished in compliance with the newly revised guidelines.
