CBN orders banks to name MD/CEOs' successors six months before exit

The Central Bank of Nigeria (CBN) has directed all Domestic Systemically Important Banks to announce successors to their managing directors and chief executive officers (MD/CEOs) at least six months before the expiration of the incumbent’s tenure.

Join the Premium Times WhatsApp Community For Quick Access To News and Happenings Around You.

Open in WhatsApp

The bank gave this directive on Tuesday in a circular issued by the Director, Financial Policy and Regulation Department, Rita Sike.

The CBN said the move was to strengthen corporate governance in the banking sector and reduce risks linked to abrupt leadership changes.

The directive requires banks to obtain regulatory approval for a successor not later than six months before the end of an MD/CEO’s term. It also mandates public disclosure of the appointment at least three months before the incumbent leaves office.

“This requirement seeks to minimise disruptions at the top management level, enable top management appointees to prepare adequately for their new roles, and generally mitigate risks associated with abrupt changes in leadership,” the circular said.

The policy is rooted in Section 2.14 of the CBN’s 2023 Corporate Governance Guidelines, which already compel commercial, merchant, non-interest, and payment service banks to prepare succession plans for their MD/CEOs, executive directors, and senior management.

Domestic Systemically Important Banks, which include some of Nigeria’s largest lenders, are considered too critical to the financial system to fail.

Stay Ahead with Premium Times

Add as a preferred source on Google

READ ALSO: Tax Reform: Nigerians must now obtain tax ID to operate bank accounts – Dogara

The CBN has, in recent years, tightened oversight of these institutions, citing their role in financial stability and public confidence in the banking sector.

The new directive may be part of efforts to avoid governance lapses that have previously plagued leadership transitions in the sector, where sudden exits or regulatory interventions have sometimes caused uncertainty among investors and depositors.

The circular stressed: “In recognition of the critical role that DSIBs play in sustaining financial system stability, the CBN hereby reiterates the importance of effective succession planning in these institutions.”

Banks have been instructed to ensure strict compliance with the directive.