The Central Bank of Nigeria (CBN), has announced the review of the tenure for executive management and non-executive directors of banks and financial institutions and financial holding companies in the Code of Corporate Governance for Banks and Discount Houses.
Under the review, the cumulative tenure limit of executive directors (EDs), deputy managing directors (DMDs), managing directors (MDs), and non-executive directors (NEDs) across the banking industry is 20 years.
A circular addressed to all deposit money banks, signed by the Director, Financial Policy and Regulation Department, CBN, Chibuzor Efobi, explained that the review is part of measures aimed at strengthening governance practices in the banking industry.
The circular (Ref: FPR/DIR/CIR/GEN/01/004) reads in part: “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.
“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 cumulative tenure limit of EDs, DMDs, MDs, and NEDs across the banking industry is 20 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 directors (INEDs), 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.”
Already speculations are rife concerning how many of the current bank chiefs will be affected by the new tenure guidelines and how the affected banks will comply with the new directive, which starts immediately.
