The Central Bank of Nigeria (CBN) has announced a new tenure limit for executive management and non-executive directors of banks and financial institutions. The revised policy stipulates that executives can only serve a cumulative maximum tenure of 20 years across the banking industry. The aim of the review is to enhance governance practices within the banking industry.
In a circular addressed to all deposit money banks, the CBN’s director of the financial policy and regulation department, Chibuzor Efobi, stated that the maximum tenure for executive directors, deputy managing directors, and managing directors will be ten years. If an executive director becomes a deputy managing director or managing director before the end of their maximum tenure, their cumulative tenure should not exceed twelve years. However, an executive director who becomes a deputy managing director cannot exceed a cumulative tenure of 10 years as an executive director and deputy managing director.
According to a circular from the Central Bank of Nigeria, executive management and non-executive directors of banks and financial institutions will now have a revised tenure limit. The circular stated that executives can only serve a maximum of 20 years across the banking industry, and non-executive directors (NEDs) will serve for a maximum period of twelve (12) years in a bank, broken into three terms of four years each, except for independent non-executive directors (INED).
Additionally, EDs, DMDs, and MDs who exit from the board of a bank either upon or prior to the expiration of their maximum tenure will have to serve a cooling-off period of one year before being eligible for appointment as a NED to the board of directors. The new measures are part of the Central Bank’s effort to strengthen governance practices in the banking industry.
Affected bank executives
According to PREMIUM TIMES’ findings, top executives affected by the new directive include Segun Agbaje of GTB, Tony Elumelu of UBA, Jim Ovia of Zenith, and Herbert Wigwe of Access.
Mr. Agbaje has been with GT Bank since its inception in 1991 and has risen through the ranks, serving as Executive Director in January 2000, Deputy Managing Director in August 2002, and later becoming the MD and CEO of GTBank in June 2011 after the passing of former CEO, Tayo Aderinokun.
In the early stages of his career, Mr. Elumelu turned the almost insolvent Standard Trust Bank into a top-five player in Nigeria. In 2005, he led the largest merger in the sub-Saharan African banking sector by acquiring United Bank for Africa (UBA). He transformed UBA from a single-country bank into a pan-African institution with over 7 million customers in 19 African countries in just five years. This merger saw him become the CEO of the new, larger entity.
Mr. Wigwe was appointed group managing director/CEO in 2014 and subsequently became a non-executive director of the bank in May 2022.
Meanwhile, Mr. Ovia, the founder of Zenith Bank, was appointed as board chairman and non-executive director of the bank in 2014.
It is currently unclear how the affected commercial banks plan to comply with the new directive, but the CBN has stated that the tenure review will apply “effective the date of this circular.”