Mandatory Fixed Tenure for Bank CEOs: Should Central Bank of Nigeria be Involved

Posted: 25 Jan 2010

Date Written: January 25, 2010

Abstract

Recently the Central Bank of Nigeria (CBN) issued a policy making it mandatory for the CEO of Banks operating in Nigeria to have a maximum fixed tenure of ten years (i.e five years in the first instance which can only be renewed once). The policy became effective retroactively, hence bank CEOs who have spent more than ten years were given 6 months to retire and succession plan put in place.

The purpose of this policy was to further entrench corporate governance in the banks. Recruitment and replacement of CEO's have always been the responsibility of the board/shareholders. Does the CBN have a legal backing to interfere with internal responisibilities of the board/shareholders? What impact will it have on corporate governance and continued survival of the banks considering that those mainly affected were entrepreneurs who founded those banks? This note investigated this policy shift by CBN with a view to finding out the basis, appropriateness of the policy and its impact on the nation's banking system.

Keywords: Mandatory Tenure, Bank CEOs, Corporate Governance, Nigerian Banks, Central Bank of Nigeria

Suggested Citation

Offor, Emeka, Mandatory Fixed Tenure for Bank CEOs: Should Central Bank of Nigeria be Involved (January 25, 2010). Available at SSRN: https://ssrn.com/abstract=1541789

Emeka Offor (Contact Author)

ACTAG ( email )

P.O. Box 72740
Victoria Island
Lagos, 101241
Nigeria

HOME PAGE: http://www.actag.com.ng

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