The Central Bank of Nigeria (CBN) has revised the regulatory requirements for the tenure of executive management and non-executive directors of Deposit Money Banks (DMBs) and Financial Holding Companies.
In a circular posted on its website on Friday, the apex bank said the move was part of measures aimed at strengthening governance practices in the banking industry.
According to the circular, which was signed by the Director of the Financial Policy and Regulation Department at the CBN, Mr Chibuzo Efobi, and took effect yesterday, the tenure of Executive Directors (EDs), Deputy Managing Director (DMDs) 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 years.”
It also stated that, where an Executive Director, 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 such Executive shall not exceed twelve years.”
However, the circular said that for an 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.”
Furthermore, it announced that Non-Executive Directors (NEDs), with the exception of Independent Non-Executive Directors (INED), “shall serve for a maximum period of twelve years in a bank, broken into three terms of four years each.”
In addition, the circular said that EDs, DMDs and MDs, who exit from the board of a bank either before or at 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.”
Similarly, it stated that NEDs who exit from the board of a bank, either before or at the expiration of his/her maximum tenure of 12 years(3 terms of 4 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.”
According to the circular: “The cumulative tenure limit of EDs/DMDs, MDs and NEDs across the banking industry is 20 years.”
