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The Central Bank of Nigeria (CBN) has issued a fresh directive compelling all Domestic Systemically Important Banks to obtain regulatory approval for the appointment of successor managing directors at least six months before the exit of incumbent chief executives.
In addition, the apex bank ordered that such appointments must be made public no later than three months before the outgoing CEO officially vacates office. The policy shift is part of broader efforts to strengthen corporate governance, reduce uncertainty, and preserve confidence in Nigeria’s financial system.
The directive was contained in a circular signed by the Director of Financial Policy and Regulation, Dr Rita Sike, and published on the CBN’s website on Tuesday.
“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 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.
Please ensure strict compliance.”
The CBN stressed that leadership uncertainty at large banks could destabilise the financial sector and, by extension, the wider economy.
The circular is anchored in Section 2.14 of the Corporate Governance Guidelines issued in 2023, which requires the boards of commercial, merchant, non-interest, and payment service banks to maintain robust succession plans for their most senior executives.
The guidelines are designed to ensure that banks have orderly transitions at the top, minimising risks linked to sudden leadership vacuums. According to the CBN, the new rule “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.”
Domestic Systemically Important Banks, often referred to as “too big to fail” institutions, play a crucial role in the financial system because of their size, complexity, and interconnectedness. A shock at such banks could ripple through Nigeria’s financial markets, threatening not only depositors and shareholders but also the stability of other institutions and the overall economy.
By tightening succession rules, the CBN aims to safeguard against leadership instability in these systemically important institutions, ensuring smoother management transitions and stronger resilience in times of uncertainty.
The apex bank explained that the directive brings Nigeria closer in line with international best practices, where regulators emphasise succession planning as a critical element of risk management in the banking industry.
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