The Central Bank of Nigeria (CBN) has issued a new directive mandating all Domestic Systemically Important Banks (DSIBs) to publicly announce the appointment of a new Managing Director/Chief Executive Officer (MD/CEO) at least three months before the scheduled exit of the incumbent.
In addition, banks are required to obtain regulatory approval for the successor’s appointment no later than six months before the current MD/CEO’s tenure ends.
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The CBN said that the move was aimed at ensuring seamless leadership transitions and reducing potential disruptions in the top management of key financial institutions.
“This requirement is aimed at: minimising disruptions at the top management level. Enabling appointees to adequately prepare for their new roles, and mitigating risks associated with abrupt leadership changes”, the apex bank noted.
This was contained in a circular to DSIBs and signed by Rita I. Sike Director, Financial Policy & Regulation Department, CBN.
According to the circular, Section 2.14 of the CBN corporate governance guidelines for Commercial, Merchant, Non-Interest, and Payment Service Banks in Nigeria (2023) mandates the boards of such institutions to approve succession plans for their Managing Directors/Chief Executive Officers (MD/CEO), Executive Directors (EDs), and senior management staff.
“In view of the critical role Domestic Systemically Important Banks (DSIBs) play in maintaining financial system stability, the CBN reiterates the importance of effective succession planning in these institutions.
“Accordingly, and in line with sound corporate governance practices, each DSIB is required to: obtain regulatory approval for the appointment of a successor MD/CEO not later than six months before the expiration of the incumbent’s tenure.
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“Publicly announce the appointment of the successor MD/CEO not later than three months before the planned exit of the incumbent.
“You are hereby directed to ensure strict compliance with the above directives,” the circular added.
