The Central Bank of Nigeria (CBN) has revised the regulatory requirements for the tenure of Executive Management and Non-executive Directors (NEDs) of deposit money banks (DMB) and financial holding companies (HoldCos).
The apex bank disclosed this in a circular to all banks on February 24, 2023, titled: “Re: Review of Tenure of Executive Management and Non-Executive Directors of Deposit Money Banks in Nigeria.”
The new regulations were made in line with the Code of Corporate Governance for Banks and Discount Houses, and aimed at strengthening governance practices in the banking industry, Investors King reports.
According to the CBN, the tenure of Executive Directors (EDs), Deputy Managing Directors (DMDs) 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 10 years.
In addition, where an executive who is a DMD becomes the MD/CEO of a bank or any other DMB before the end of their maximum tenure, the cumulative tenure of such executive shall not exceed 12 years. Similarly, for an Executive Director (ED) who becomes a DMD of a bank or any other DMB, their 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 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 their maximum tenure, shall serve out a cooling-off period of one year before being eligible for appointment as a NED to the board of directors.
Similarly, NEDs who exit from the board of a bank either upon or prior to the expiration of their maximum tenure of 12 years (three terms of four years each), shall serve out a cooling-off period of one year before being eligible for appointment to the board of directors of any other DMB. The cumulative tenure limits of EDs/DMDs/MDs and NEDs across the banking industry is 20 years.
The new regulatory requirements were signed by the Director, Financial Policy and Regulation Department, CBN, Mr. Chibuzo Efobi. In conclusion, it is believed that the new regulations will help to enhance transparency and accountability in the banking industry, which is essential for sustainable economic growth and development in Nigeria.