CBN Mandates Banks to Announce Successor CEOs Six Months Ahead of Exit

Nume Ekeghe

The Central Bank of Nigeria (CBN) has issued a fresh directive to all domestic systemically important banks (DSIBs), mandating them to announce the appointment of successor chief executives at least six months before the end of the tenure of the incumbent Managing Director/Chief Executive Officer (MD/CEO).

The directive was contained in a circular issued yesterday by the Director of Financial Policy and Regulation Department, Dr. Rita I. Sike, to the affected institutions, underscoring the regulator’s commitment to promoting stability in the financial system through effective corporate governance practices.

 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) requires bank boards to approve succession plans for managing directors/Chief Executives, executive directors, and senior management staff.

This, the apex bank noted, was aimed at minimising disruptions at the top management level, preparing appointees adequately for new responsibilities, and mitigating risks associated with abrupt leadership changes.

It stated: “Section 2.14 of the Central Bank of Nigeria (CBN) Corporate Governance Guidelines for Commercial, Merchant, Non-interest, and Payment Service Banks in Nigeria, 2023, requires boards of commercial, merchant, non-interest, and payment service banks to approve succession plans for their Managing Directors/Chief Executive Officers (MD/CEO), other EDs and senior management staff.

“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.

“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.

“Consequently, and in line with good corporate governance practice, each DSIB is hereby required to: Ensure it obtains regulatory approval for the appointment of a successor Managing Director (MD/CEO) not later than six months to the expiration of the tenor of the incumbent MD/CEO.

“Publicly announce the appointment of the successor MD/CEO not later than three months to the planned exit of the incumbent MD/CEO.”