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CBN to evaluate banks’ top officials, board every 2 years

By Omoh Gabriel, Business Editor
LAGOS — THE Central Bank of Nigeria, CBN, has launched fresh criteria for persons occupying top position and seeking to hold more than five per cent shares in Nigerian banks and other financial institutions in the country.

This has reversed the previous guidelines on appointment of banks board and key management officers of banks in the country. The new set of guidelines is what the CBN termed “Approved person’s regime.”

Apart from meeting the new set of rules, such officers will be evaluated for their suitability for the position every two years.

According to the CBN circular, “to assess competence of candidates for Board and top management positions, their capacity to fulfill the responsibilities of their positions and their ability to understand the technical requirements of the business, the CBN shall take into account all relevant considerations, including but not limited to factors listed against each of the positions.

Performance on the job is an integral part of this assessment. Thus candidates shall be subjected to a continuous fitness and propriety test every 2 years or any other period as may be specified by the CBN.”

The apex bank in a circular to all banks signed by Chris O. Chukwu, Director, Financial Policy and Regulation Department Assessment criteria for Approved persons regime for Financial institutions said: “Further to the on-going reforms in the banking system and the CBN’s determination to ensure that only “fit and proper persons” are considered for appointment to top management positions in banks, discount houses and other financial institutions as well as serve as significant shareholders, 5 per cent and above, the bank has reviewed its circular referenced BSD/DO/CIR/VOL.1/01/2001, dated January 4, 2001, which specified criteria for board and top management appointments in Nigerian banks.

“In the light of the above, the minimum conditions specified in these guidelines will be required (as appropriate) for candidates occupying or intending to occupy the underlisted top management and board positions in Nigerian banks, discount houses and other financial institutions.”

The circular said “The objective is to provide a broad framework for assessing a person’s capacity as “fit and proper” for the position for which he is being considered.

These Guidelines supersedes our circular referenced BSD/DO/CIR/VOL.1/01/2001 dated January 4, 2001 and applies to banks Regional, National and International, Specialized financial institutions”.

It said that the CBN “Fitness tests assess the competence of candidates for Board, top management and critical operational positions and their capacity to fulfill the responsibilities of their positions while propriety tests assess their integrity and suitability”.

According to the CBN “In assessing a candidate’s integrity and suitability, elements to be considered include: “Breach of Sections 19 (1)(a) and 44 of BOFIA 1991, as amended, where such a person is or has been; of unsound mind or as a result of ill- health is incapable of carrying out his duties; or  declared bankrupt or suspends payments or compounds with his creditors including his bankers; convicted of any offence involving dishonesty or fraud; or guilty of serious misconduct in relation to his duties; or disqualified or suspended from practicing a profession; or a director of or directly involved in the management of a bank which has been wound up by the Federal High Court; And whether: the candidate is or has been the subject of any proceedings of a disciplinary or criminal nature, or has been notified of any impending proceedings or any investigation, which might lead to such proceedings; such appointment would result in conflict of interest thus contravening the provisions of sections 19 (2) and

(3) of BOFIA 1991, as amended; the candidate, or any business in which he has controlling interest or exercises significant influence, has been investigated, disciplined, suspended or criticized by a regulatory or professional body, a court or tribunal, whether publicly or privately; the person has been the subject of any justified complaint relating to regulated activities; the person has been dismissed, asked to resign from employment or from a position of trust, fiduciary appointment or similar position because of questions about his honesty and integrity; the person has ever been disqualified under BOFIA or CAMA or any other legislation or regulation, from acting as a director or serving in a managerial capacity; the person deliberately misled (or attempts to mislead) by act or omission a client, the institution and/or the regulators; the person deliberately falsified documents to mislead a client, the institution and/or regulators; the person has deliberately failed to inform the client, institution and/or regulator, without reasonable cause, of the fact that their understanding of a material issue is incorrect, despite being aware of their misunderstanding; the person had deliberately failed to disclose the existence of Falsified documents; the person has deliberately prepared inaccurate or inappropriate Records or returns.

The CBN said that candidates for the top bank positions will be expected to meet the following general guidelines; complete an “Approved Persons Regime” questionnaire to be administered by the CBN; provide a satisfactory status report from the last place of work, court records; security agencies; CBN and other regulatory agencies in the financial services sector; satisfy the CBN that he/she is able to meet personal financial obligations/commitments on a continuous basis and demonstrate satisfactory discharge of fiduciary responsibilities; and  provide three reference letters, two of which must be from the last place of work, in the last five years and from persons not below the rank of a director.

The circular said that any investor with significant shareholding of 5 per cent and above in any Financial Institution in Nigeria shall; be of good character, honest, reputable and reliable; have financial resources sufficient to meet commitments on a continuing basis; be able to meet and has been meeting outstanding obligations as they become due; ensure adequate control of financial risks on a continuing basis; certify that the funds used in the acquisition of the shares were not borrowed from within the banking system or are the proceeds from money laundering and/or any criminal activity; not have been indicted in the failure or mismanagement of any financial institution; fulfill all the conditions stipulated in the propriety principles; attend an oral interview with the CBN; complete an “Approved Persons Regime” questionnaire to be administered by the CBN; provide three reference letters from individuals of reputable standing in the country;

The CBN at its discretion may use any available information in addition to those provided by financial institutions and/or candidates, to assess the fitness or propriety of a person.

It said that persons for the position of Managing and Deputy Managing Director, “A minimum of first degree or its equivalent in any discipline (additional qualification or degree in any business related discipline may be an advantage);  A minimum of fifteen 15 years post qualification experience out of which, at least, ten 10 must be in management and leadership positions; and  The bank must provide evidence that the candidates possess proven skills and competences.

For  GENERAL MANAGER/DEPUTY GENERAL MANAGER/ASSISTANT GENERAL MANAGER
They must have a minimum of first degree or its equivalent in any discipline (additional qualification or degree in any business related discipline would be an advantage); A minimum of ten (10) years post qualification experience out of which, at least, seven (7) must have been in the relevant areas of job role; The bank must provide evidence that the candidates possess proven skills and competencies in their field.

For NON-EXECUTIVE DIRECTORS It said “Without prejudice to the provisions of the Code of Corporate Governance, candidates must possess: A first degree or its equivalent in any discipline; Proven skills and competencies in their fields; Knowledge of the operations of banks/discount houses and relevant laws and regulations guiding the financial services industry; Ability to make meaningful contributions to board deliberations.; and All the conditions stipulated in the propriety principles shall apply;

Non-Executive Directors shall, in addition, be required to: Undergo directors’ training at the institution’s expense, aimed at acquiring or having the prerequisite knowledge of their responsibilities and duties as non-executive directors; Provide three reference letters from individuals of reputable standing in the country.

In considering nominees with limited industry experience, the CBN shall take into account the following: The size, scope and complexity of the institution; The relevant experience and qualifications of other Board members; The existence and number of Independent Directors on the Board; An assurance that the proposed director(s) would be
exposed to accelerated training over a short period of time; Assignment of responsibilities commensurate with their experiences. Notwithstanding the requirements stated above, the CBN may at its discretion, consider and approve the appointments of candidates under special circumstances.


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