The Central Bank of Nigeria has announced a revision of the tenure limit for executive management and non-executive directors of banks and financial institutions.
According to the review, the executives can only serve a cumulative tenure of 20 years across the banking industry.
In a circular addressed to all deposit money banks, signed by the director of the financial policy and regulation department, Chibuzor Efobi, the bank said the review is part of measures aimed at strengthening governance practices in the banking industry.
“The tenure of executive directors (ED), deputy managing directors (DMD) and managing directors (MDs) shall be in accordance with the terms of their engagement approved by the board of directors of banks, subject to a maximum tenure of ten (10) years,” the central bank said in the circular, dated 24 February.
“Where an executive who is a DMD becomes the MD/CEO of a bank or any other DMB before the end of his/her maximum tenure, the cumulative tenure of the such executive shall not exceed twelve (12) years.
“However, for an executive (ED) who becomes a DMD of a bank or any other DMB, his/her cumulative tenure as ED and DMD shall not exceed 10 years.”
The bank said that non-executive directors (NEDs), with the exception of independent non-executive directors (INED), shall serve for a maximum period of twelve (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 his/her maximum tenure, shall serve out a cooling-off period of 1 year before being eligible for appointment as a NED to the board of directors.
“NEDs who exit from the board of a bank either upon or prior to the expiration of his/her maximum tenure of 12 years (three terms of four years each), shall serve out a cooling-off period of 1 year before being eligible for appointment to the board of directors of any other DMB,” he CBN said.
Affected bank executives
Checks by PREMIUM TIMES showed that top executives affected by the new directive included Segun Agbaje of GTB, Tony Elumelu of UBA, Jim Ovia of Zenith and Herbert Wigwe of Access.
Mr. Agbaje joined GT Bank as a pioneer staff in 1991 and rose through the ranks to become an Executive Director in January 2000, and Deputy Managing Director in August 2002. He was later appointed as the substantive MD and CEO of GTBank in June 2011 when erstwhile CEO, Tayo Aderinokun, passed.
Mr. Elumelu in his early career made a name for himself by turning the nearly bankrupt Standard Trust Bank into a top-five player in Nigeria. In 2005 he led the largest merger in the banking sector in sub-Saharan Africa, acquiring United Bank for Africa (UBA). In five years, he transformed it from a single-country bank to a pan-African institution with over 7 million customers in 19 African countries. The business combination with UBA saw him become the chief executive of the new larger entity.
Mr. Wigwe was appointed group managing director/CEO in 2014. He subsequently became a non-executive director of the bank effective May 2022.
On his part, Mr. Ovia, the founder of Zenith Bank, was appointed as board chairman and non-executive director of the bank in 2014.
It is not immediately clear how the affected commercial banks plan to comply with the new directive but the CBN explained that the tenure review shall apply “effective the date of this circular.”