CBN Mandates Succession Planning for Major Banks
By Patience Ikpeme
The Central Bank of Nigeria (CBN) has issued a directive requiring all Domestic Systemically Important Banks (DSIBs) to put in place a clear succession plan for their chief executives.
The new rule, contained in a circular signed by Dr. Rita I. Sike, the Director of the Financial Policy & Regulation Department, aims to ensure seamless leadership transitions and mitigate risks associated with abrupt changes at the top management level.
Under the new order, DSIBs are now required to obtain regulatory approval for the appointment of a successor to their Managing Director or Chief Executive Officer no later than six months before the incumbent’s term expires.
Furthermore, the appointment of the successor must be publicly announced at least three months before the planned exit of the outgoing MD/CEO.
This directive is consistent with Section 2.14 of the CBN Corporate Governance Guidelines for various banks, which mandates boards to approve succession plans for their top executives and senior staff.
The CBN’s circular explained that this requirement is meant 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.”
The circular also recognized the critical role that DSIBs play in maintaining financial system stability. By doing so, the apex bank is setting a new standard for corporate governance within these vital institutions.
