The Central Bank of Nigeria (CBN) has updated the regulatory standards for the terms of Executive Management and Non-Executive Directors (NEDs) of Deposit Money Banks (DMB) and Financial Holding Companies (HoldCos).
The apex bank explained that the rule was in accordance with the Code of Corporate for Banks and Discount Houses (Ref: FPR/DIR/CIR/GEN/01/004) in a circular to all banks dated February 24, 2023, titled: “Re: Review of Tenure of Executive Management and Non-Executive Directors of Deposit Money Banks in Nigeria.”
Director of CBN’s Financial Policy and Regulation Department Mr. Chibuzo Efobi signed the letter.
The CBN states that, subject to a maximum tenure of 10 years, the terms of the engagement agreed by the board of directors of banks must govern the duration of Executive Directors (EDs), Deputy Managing Directors (DMDs), and Managing Directors (MDs).
Also, according to the regulatory body for the banking industry, an executive’s cumulative tenure cannot exceed 12 years if they hold the position of MD/CEO of a bank or another DMB before the conclusion of their maximum tenure.
READ ALSO: Federal Lawmaker Detained for Suspected Money Laundering with $498,100 in Rivers
But, the document said, “For an Executive Director (ED), who becomes a DMD of a bank, or any other DMB, his or her combined term as ED and DMD shall not exceed 10 years. NEDs, with the exception of Independent Non-executive Directors (INEDs), may serve in a bank for a total of 12 years, divided into three terms of four years each.
“EDs, DMDs, and MDs must serve out a one-year cooling-off period before becoming eligible for appointment as a NED to the board of directors if they resign from the board of a bank either at the end of their maximum tenure or earlier.
“NEDs who resign from the board of a bank at or before the end of their maximum 12-year term (three terms of four years each) must wait one year before being eligible for nomination to the board of directors of any other DMB.
“Across the banking industry, the total tenure cap for EDs, DMDs, MDs, and NEDs is 20 years. In that case, kindly guide me.
It made note of the fact that the rules were a component of initiatives aimed at enhancing banking industry governance standards.
