Three bank CEOs to quit in July over new tenure limit
Category: Capital Market
Three bank chief executives are set to step down by July 10, 2010 courtesy of a new tenure limit unveiled yesterday by the Central Bank of Nigeria (CBN). By the new limit, no managing director or chief executive officer of a bank will be allowed to serve for more than two terms of five years each. Jim Ovia, pioneer chief executive of Zenith Bank; Tony Elumelu who transited from the defunct Standard Trust Bank (STB) as its CEO to United Bank of Africa (UBA) also as the managing director and Falolu Bello, managing director of Unity Bank.
Given the retroactive nature of the tenure limit, the three bank chiefs who had already spent more than 10 years in their various positions will have to hand over to their successors on July 10. The decisions were taken on Monday by CBN’s Board of Governors as a way of instilling good corporate governance in banks, institutionalising the arrangement for appointment of chief executives, as well as ensuring that banks put in place a good succession plan.
Announcing the Board’s decision to journalists yesterday after the Bankers’ Committee meeting held in Abuja, Samuel Oni, CBN’s director of banking supervision said the apex bank also took the steps to especially ensure that the institutions are not nationalised.
According to Oni, all banks will reflect the provisions of the new guidelines as part of their engagement procedures of their CEOs. “All CEOs who would have served for 10 years by July 31, 2010 shall cease to function in that capacity and shall hand over to their successors. The banks are expected to have a credible succession programme that would be supervised by the board and monitored by the CBN.
Similarly, “where a bank is a product of a merger, acquisition, takeover or any other form of combination, the 10-year period shall include the pre and post combinations service years of the CEOs, provided that the bank in which he previously served as CEO was part of the new bank that emerged after the combination”, Oni said of the apex bank’s decision said.
According to the CBN directive, any person who has served as CEO for the maximum tenure in a bank has been disqualified for appointment in that bank or its subsidiaries until three years after his exit as CEO. Oni further reiterated that the conditions and terms under for the appointment of CEOs as approved by the board must also be ratified and approved at their annual general meeting.
Under the new dispensation also, Oni informed that “the governor, deputy governors of the CBN and the managing director/ CEO and executive directors of the Nigerian Deposit Insurance Corporation shall not be eligible for appointment in any capacity in banks and their subsidiaries under the supervision of the CBN and NDIC until after the expiration of five years from the date of their exit from CBN or NDIC as the case may be”.
Also, “the departmental directors of the CBN and that of NDIC shall not be eligible for appointment in any capacity in banks and their subsidiaries under the supervision of the CBN and NDIC until after the expiration of three years from the date of their exit from either the CBN or NDIC as the case may be”, the director added. However, some finance experts have expressed reservations on the tenure limitation. They are of the opinion that the owners of the company should determine who manages their bank and not the apex bank.
One of the respondents who spoke with BusinessDay but preferred not to be named said if one owns a bank, and he is running it well with depositors’ funds not threatened, the CBN has no right to chase him or her away.