Mandatory Fixed Tenure for Bank CEOs: Should Central Bank of Nigeria be Involved
Posted: 25 Jan 2010
Date Written: January 25, 2010
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
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