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CBN orders bank MDs of 10yrs to quit

Emma Ujah, Anuja Bureau Chief & Tina Onah
The new banking reforms of the Governor of the Central Bank of Nigeria (CBN) Mr. Sanusi Lamido Sanusi, has claimed its latest victims, the Managing Directors of  banks who have served or whose 10-yr-tenure would lapse by July 31st 2010 .

This is in line with the CBN new regulations which provides for tenured appointments of banks’ Managing Directors, fixed for a maximum of two terms of five years, each.

Director, Banking Supervision of the CBN, Dr. Samuel Oni, who announced this at a press briefing in Abuja, yesterday, said the decision which was taken by the Board of the apex bank, on Monday was “to ensure that the banking institutions are not personilaised.”

According to him, “all bank MDs who would have served for the period of 10 years by July 31 shall seize to act in that capacity”.

Besides, the CBN said that all those who are MDs of banks which are products of either mergers  or acquisition in the 2006 consolidation exercise shall have their pre and post merger years of service combined, for the purpose of the new regulations.

CBN directed that all bank boards should immediately review the terms of appointment of their MDs to reflect the new regulations.

All MDs who would have attained the 10-year maximum two-term period by July 31,should immediately start a succession programme to enable a successor emerge on or before the terminal date.

CBN also said that any MD who quits a bank, having attained the 10-year maximum period in a bank shall not be eligible appointment in the same bank or any of its subsidiaries until after three years.

In what the apex bank described as part of its efforts at ensuring good corporate governance in banks, it barred all CBN governors and the MD of the Nigeria Deposit Insurance Corporate (NDIC) shall not be eligible for appointment in any bank until after five years of exit.

The same rule applies to directors of the CBN and the NDIC, except that their break period was reduced to three years.

Fielding questions, Dr. Oni explained that it was not compulsory for the tenure of appointment of an MD to be five years, either in the first or second, saying “it could be less”.

He added that the regulations could not operate reactively and therefore, past CBN and NDIC officials were not affected but that the CBN expects all such officials to decline offers on moral grounds.

Earlier, at a separate briefing on the first Bankers’ Committee meeting in the year, the director announced that the CBN held a meeting with Boards and management of the banks which management were removed last year, towards  their successful recapitalization.

He allayed fears that the CBN had special interests in any of the banks being sold to any individuals or groups, as according to him, the apex bank would only play the roles of a facilitator.

“Most of the works have to be done by the boards and the managements of the affected banks. We made it clear to them that CBN will only play the roles of an intermediary. ” he said.

Mr. Oni explained that the boards and managements of the banks would drive the process in each bank and that it was indeed in the interest of shareholders to ensure that the recapitalisation exercise was successful in all the banks.

According to him, the Friday, last week meeting was indeed to brief the boards and management on the framework for the recapitalization and to resolve any issue or issues that could be inimical to the planned recapitalization, including court cases, instituted by some stakeholders in the affected banks.

He added that the CBN has issued a new Minimum Disclosure guidelines which it expected all banks to comply with, expressing optimism that with the new requirements, the CBN would be in a better position to know the health of each bank, at any given time.


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