The Central Bank of Nigeria (CBN) has announced an increase in the maximum tenure for Managing Directors/Chief Executives of banks from 10 years to 12 years. This adjustment was disclosed in a circular titled “Corporate Governance Guidelines for Commercial, Merchant, Non-interest, and Payment Service Banks in Nigeria.” The circular, dated July 13, 2023, was issued by Chibuzo Efobi, Director of the Financial Policy and Regulation Department at the CBN. It was addressed to commercial, merchant, non-interest, Payment Service Banks, and Financial Holding Companies (FHCs).
In addition to extending the tenure of Managing Directors/Chief Executives, the CBN also raised the maximum tenure for Deputy Managing Directors (DMDs) and Executive Directors (EDs) of banks to 12 years.
The objective of the new guidelines is to provide further guidance on the principles, recommended practices, and responsibilities outlined in the Nigerian Code of Corporate Governance (NCCG) of 2018. These guidelines also aim to establish industry-specific corporate governance standards for banks and promote high ethical standards among banking operators while enhancing public confidence.
The extension of the tenure for bank chief executives reflects the CBN’s recognition of the evolving nature of the banking industry and the need for stability in leadership. By allowing for a longer tenure, the CBN seeks to provide continuity and foster long-term strategic planning within banking institutions.
This move aligns with global trends in corporate governance practices, where longer tenures for executives are becoming more common. It is expected to contribute to effective decision-making, sustained growth, and enhanced performance within the banking sector.
The CBN’s new guidelines come as part of ongoing efforts to strengthen the governance framework of Nigerian banks and promote sound risk management practices. By providing industry-specific standards, the CBN aims to further enhance the stability and resilience of the banking sector.
As banks and financial institutions in Nigeria adapt to the new guidelines, stakeholders will closely monitor the impact of extended tenures on leadership, governance, and overall performance within the sector.
