The banking industry in Nigeria is undergoing a major shake-up following the issuance of a new rule by the Central Bank of Nigeria (CBN), affecting many chairmen. According to the new rule, bank executive directors, managing directors, deputy managing directors, and non-executive directors are limited to a cumulative tenure of 20 years across the banking industry.
The directive, contained in a circular addressed to all deposit money banks, was signed by Chibuzor Efobi, director of the financial policy and regulation department at CBN. The move is aimed at strengthening governance practices in the banking industry.
Under the new regulation, executive directors, deputy managing directors, and managing directors shall serve for a maximum of 10 years, subject to the terms of their engagement approved by the board of directors of banks. However, in the case of an executive who becomes a DMD of a bank before the end of his/her maximum tenure, the cumulative tenure shall not exceed 12 years. For executives who become EDs, their cumulative tenure as ED and DMD shall not exceed 10 years.
Non-executive directors, except independent non-executive directors, 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 a cooling-off period of one year before being eligible for appointment as an NED to the board of directors.
The above tenure requirements shall apply effective from the date of the circular, and it is understood that the implementation of the new rule will lead to the exit of many top bank executives in Nigeria, including Jim Ovia, Tony Elumelu, Segun Agbaje, and Herbert Wigwe.