The Central Bank of Nigeria (CBN) has revised the requirements for the tenure of executive management and non-executive directors of Deposit Money Banks (DMBs) and Financial Holding Companies.
In a circular signed by the Director of the Financial Policy and Regulation Department at the CBN, Chibuzo Efobi, and posted on its website on Friday, the apex bank said the move was part of measures to strengthen governance practices in the banking industry.
The new directive, according to the circular, took effect on Thursday.
Based on the arrangement, the tenure of Executive Directors (EDs), Deputy Managing Directors (DMDs), and Managing Directors (MDs) will be following the terms of their engagement approved by the Board of Directors of banks, subject to a maximum tenure of 10 years.
It added that where an ED or DMD becomes the MD/CEO of a bank or any other DMB before the end of their maximum tenure, the cumulative tenure of such Executive shall not exceed 12 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), except Independent Non-Executive Directors (INED), “shall serve for a maximum period of 12 years in a bank, broken into three terms of four years each.”
It read: “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 one year before being eligible for appointment as a NED to the Board of Directors.
“Similarly, NEDs who exit from the board of a bank, either before or at the expiration of their 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.
“The cumulative tenure limit of EDs/DMDs, MDs, and NEDs across the banking industry is 20 years.”