Six months prior to the departure of existing managing directors, the Central Bank of Nigeria has instructed all domestic systemically important banks to obtain its clearance before appointing successors.
Additionally, the apex bank mandated that these appointments be announced to the public at least three months prior to the departing CEO’s official departure.
Rita Sike, the Director of Financial Policy and Regulation, signed the circular containing the directive, which was posted on the apex bank’s website on Tuesday.
As a result, and in accordance with sound corporate governance principles, every DSIB is mandated to: (1) Make sure that the selection of a successor Managing Director (MD/CEO) receives regulatory approval no later than six months prior to the incumbent MD/CEO’s term ending.
(2) Three months before to the incumbent MD/CEO’s scheduled departure, make a public announcement regarding the appointment of the new MD/CEO. The statement said, “Please ensure strict compliance.”
The CBN claims that the action is meant to improve corporate governance and lessen uncertainty in the banking industry in Nigeria.
According to the circular, the obligation is based on Section 2.14 of the 2023 Corporate Governance Guidelines, which mandates that boards of commercial, merchant, non-interest, and payment service banks keep succession plans for their senior executives.
The CBN said, “This requirement aims to minimize top management level disruptions, allow top management appointees to adequately prepare for their new roles, and generally mitigate risks associated with abrupt changes in leadership.”
The bank emphasized that domestic systemically important banks are essential to the financial system and that improper management of leadership changes could lead to broader instability.
The new regulations would align Nigeria with global best practices, it was claimed.
