BY MICHAEL EBOH

The Central Bank of Nigeria, CBN, has directed banks in the country to set up codes of conduct that would guide their practices and detail their compliance to highest ethical and professional standards, even as it  announced plans to review its code of corporate governance and issued new guidelines for whistle-blowing in banks.

The CBN, in a document posted on its website,titled, ‘Exposure Drafts of the Revised Code of Corporate Governance for Bank in Nigeria and the Guidelines for Whistle-Blowing in the Nigerian Banking Industry,’ signed by Chris Chukwu, Director, Financial Policy and Regulation Department, said the code shall commit the bank, its Board and management (and employees) to the highest standards of professional behaviour, business conduct and sustainable business practices.

In the proposed code, the CBN is also seeking to ensure that banks put in place a proper succession plan for its Chief Executive Officer, executive directors and top management staff.

The CBN is also planning, through the revised code which is scheduled to come into effect soon, to ensure that no two members of the same extended family occupy sensitive position in any bank in the country.

Lamido Sanusi, CBN governor

According to the document, no two members of the same extended family shall occupy the positions of Chairman and Managing Director/Chief Executive Officer or Executive Director of the bank and Chairman or MD/CEO of a bank’s subsidiary at the same time.

CBN further barred Board Chairmen from being members of Board committees of the various banks and their subsidiaries, except for the Governance and Nominations Committee, the various Board committees shall be headed by non-executive directors.

The apex bank further made it mandatory for all directors of banks to attend all meetings of the Board, saying that in order to qualify for re-election, a director must have attended at least two-thirds of all board meetings.

As a means to regulate this, the revised code requires that, “The Board shall disclose, in the Corporate Governance section of the annual report, the total number of board meetings held in the financial year and attendance by each director.

The CBN further reiterated its position on government’s ownership of banks, pegging government’s maximum direct and indirect equity holding in any bank at 10 per cent.

On banks establishing code of conduct, the CBN said, “Banks shall establish a code of conduct and disclose the code or a summary of the code as to: the practices necessary to maintain confidence in the bank’s integrity; the practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders; the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.

“The code shall commit the bank, its Board and management (and employees) to the highest standards of professional behaviour, business conduct and sustainable business practices.

“Be developed in association with management and employees; receive commitment for its implementation from the Board and the managing director/chief executive officer and individual directors of the company. Be sufficiently detailed as to give clear guidance to users including advisers, consultants and contractors.”