THE Central Bank of Nigeria (CBN) has reviewed the tenure of directors including Managing Directors of Banks in the country, putting the cumulative tenure for Executive Directors, Deputy Managing Directors across the banking industry at a maximum of 20 years.
With the reviewed tenure, no bank executive is expected to surpass 20 years from the time of appointment as executive or non-executive director to deputy managing director and managing director.
This was contained in a circular dated February 24, 2023 sent to all deposit money banks by the apex bank and signed by the Director, Financial Policy and regulation department, Chibuzo Efobi.
According to the circular, titled “Review of Tenure of Executive Management and Non-Executive Directors of Deposit Money Banks in Nigeria”, the revised regulatory requirements for the tenure of Executive Management and Non-executive Directors of DMBs and Financial Holding Companies in the Code of Corporate Governance for Banks and Discount Houses is part of measures aimed at strengthening governance practices in the banking industry.
In 2010, the apex bank had issued the first guideline on tenures for bank executives, limiting tenures of chief executives of banks to 10 years, effectively sacking bank MDs whose tenure elapsed the 10 year stipulation as at July 31, 2010.
Thirteen years after, the apex bank is extending the tenure to executive directors, non-executive directors as well as deputy managing directors. The latest circular stipulates that the tenure of Eds, DMDs and 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 10 years.
“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 such Executive shall not exceed 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.
“Non-Executive Directors (NEDs), with the exception of Independent Non-Executive Director (INED), shall serve for a maximum period of 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 one 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 one year before being eligible for appointment to the Board of Directors of any other DMB. The cumulative tenure limit of EDs/DMDs, MDs and NEDs across the banking industry is 20 years,” it stated.
The implementation of the new rule, it was understood, would see the exit of many top bank executives in Nigeria.
First on the list of who will be affected is Jim James Ovia, a Nigerian businessman. A native of Delta state, Ovia founded Zenith Bank in 1990. He retired from the bank in 2010 following a similar CBN policy which limited the tenure of banks chief executive officers (CEOs) to a maximum of 10 years. However, the billionaire was later appointed as board chairman and non- executive director of the bank in 2014.
Tony Elumelu: At 34 year of age, Elumelu was the CEO of the defunct Standard Trust Bank, a company he later merged with United Bank for Africa (UBA) in 1997. With the merger, he remained as the bank’s CEO and served for 13 years until his retirement in 2010 when the said policy of 10-year tenure limits for bank CEOs was implemented by the CBN. Elumelu was appointed chairman of UBA in 2014, replacing Ambassador Joe Keshi.
Segun Agbaje: The astute banker moved from working for Ernst & Young in the US in 1988 to Guaranty Trust Bank (GTBank) — now Guaranty Trust Holding Company (GTCO) — as a pioneer staff in 1991 and rose through the ranks to become executive director in the year 2000 and deputy managing director in 2002. Agbaje was later appointed as the substantial MD and CEO of GTBank in June 2011, when Tayo Aderinokun passed.
Herbert Wigwe: After over 10 of service, Wigwe left GTBank as an ED to co-lead the transformation of Access Bank Plc in March 2002 as DMD. He was appointed group managing director/CEO effective January 1, 2014 and served in that capacity till May 2022. Wigwe was subsequently appointed a non-executive director of the bank effective May 2022.
