By Omoh Gabriel, Business Editor
LAGOS—THE Central Bank of Nigeria, CBN, has threatened to remove managing directors of banks found to have allowed their predecessors and some key shareholders to meddle with the day to day running of such banks.

The action, CBN says, runs counter to the corporate governance reform it was currently pursuing.

The apex bank which said it had received information that some managing directors of banks were taking directives from former managing directors and key shareholders, said that chief executive officers of banks and board members found wanting will be replaced with those it considered to be  fit and proper.

The threat which is contained in a circular dated Tuesday, November 30, with reference GVS/DGF/CON/BSV/05/109 and signed by CBN’s Deputy Governor, Dr. Kingsley Moghalu, to chairmen, managing directors and board members of all banks said: “The Central Bank of Nigeria has received reliable information regarding the involvement of former managing directors of deposit money banks and key shareholders who are not directors, in the management of banks.

“This includes cases of senior management staff by-passing established governance structures and reporting to non-bank officials. The CBN would like to draw the attention of all chief executive officers and boards of directors of banks that their ability to protect the integrity of established governance structures is a key element in our on-going assessment of fit and proper status.

“Board members and chief executive officers who are unable to assume full responsibility for their institutions assume the risk of not retaining this status. The corporate governance and other reforms of the banking sector have been instituted to ensure the sustainable growth of the sector and best-practice standards therein for the benefit of all stakeholders and the economy.

“The CBN will, therefore, take appropriate action as may become necessary to ensure compliance with fit and proper status in this context, and will continue to monitor this situation closely for that purpose”.
Sources close to CBN top management told Vanguard that the circular may not be unconnected with findings that the three banks which managing directors were asked to step aside on the ground of the new CBN ten-year tenure for bank chief executives had been directing affairs of the three banks from behind the scene.

Such persons were ordered  not to hold any position  in the bank for three years, as the CBN wanted to ensure that they were totally out of the scene.

Vanguard noted that on assumption of office last year, Sanusi Lamido Sanusi had accused eight banks of accruing high level of non-performing loans which were attributable to poor corporate governance practices, laxity in credit administration processes and the absence or non-adherence to the bank’s credit risk management practices. These led to the removal of their managing directors.

CBN has, however, warned banks against acquisition of real estates or immovable property other than as business premises for its use, as may be authorised by the CBN; grant or permit to subsist any loan, donation, gifts or any form of financial accommodation to any political funds, political party, or for political purposes whether directly or indirectly.

It also warned against incurring any political expenditure; grant or permit to subsist, any loan to any persons to invest in the primary issues of any stocks of any bank; or grant any loan or any form of financial accommodation to any person or enterprise to facilitate the acquisition of any related entity from which the bank is divesting.