CBN 2010 Directive: WEMA, Sterling banks now shopping for CEOs
Relying on the extant directive issued vide a circular to all banks by the Central Bank of Nigeria (CBN) in January 2010, there is no doubt that the managements of Wema Bank Plc. and Sterling Bank Plc. are on search for a replacement for their group managing directors (GMDs) whose tenures expired in June and December respectively.
Findings by Business Hilights revealed that both CEOs have served out their two terms of five years.
First set of causalities of the directive include CEOs of a number of banks including Zenith, UBA and Skye banks.
Business Hilights recalls in January 2010, the Board of the apex bank vide a terse circular, fixed a maximum tenure of ten years for Managing Directors and Chief Executive Officers of banks in Nigeria.
This resolution came at the time the apex bank pulled out from the negotiation and sales of the eight rescued banks to the banks management and boards who could negotiate, where desirable, with new foreign investors.
Then, CBN said the directive on maximum tenure of ten years bank is to enthrone good corporate governance in the banks and ensure that institutions are not personalised.
Otherwise, 2010 marked the first time that the tenure of bank chief executive is clearly defined and fixed.
The Director of Banking Supervision, Chief Samuel Oni who disclosed the new guideline at press conference held shortly after the Bankers Committee meeting said that bank chief executives are now to spend five years first tenure in office which is renewable for another five years time subject to good performance.
With the new directive, all chief executive officers of the banks who had served more than ten years prior to the coming of this new regulation in 2010 were asked to leave office and handover by July 31, 2010.
Chief Oni said “All CEOs who would have served for ten years by July 31, 2010 shall cease to function in that capacity and shall hand over to their successors. The banks are expected to have a credible succession programme that would be supervised by the board and monitored by the CBN”.
“Where a bank is a product of a merger, acquisition, takeover or any other form of combination, the ten year period shall include the pre and post combinations service years of the CEOs, provided that the bank in which he previously served as CEO was part of the new bank that emerged after the combination.
The Director Banking Supervision also added that “to ensure sound corporate governance a bank chief executive that resigned after spending the maximum ten years in office shall not be eligible for appointment in the bank or in any of the bank’s subsidiaries until after three years of his/her exit from office as CEO.”
“To prevent abuse of office, the Past CBN governors and their deputies including the Managing Director of the Nigeria Deposit Insurance Corporation [NDIC] shall not be eligible to take appointment in any capacity in any of the banks until after five years of leaving office while directors in CBN and the NDIC shall not be eligible for appointment in any capacity in the banks until after three years of leaving office,” the Director of Banking Supervision, at CBN, Chief Samuel Oni explained.
