In a bid to strengthen corporate governance practices in the banking industry, the Central Bank of Nigeria (‘'CBN”), on the 24th of February 2023, released a circular titled ”Review of Tenure of Executive Management and Non-Executive Directors of Deposit Money Banks in Nigeria” (the “Circular”)  to improve on the existing framework on the tenure of Executive Management and Non Executive Directors of Deposit Money Banks (DMB) and Financial Holding Companies.

This newsletter seeks to highlight the provisions of this Circular vis-a-vis the previous provisions of the CBN.

What was the previous position of the CBN?

Prior to the release of the Circular, the position of the apex bank was that Chief Executive Officers (CEOs) of commercial banks were limited to a maximum tenure of ten (10) years. Any person who had served as a CEO for the maximum tenure in a bank would not qualify for appointment at such a bank or any of its subsidiaries in any capacity until after a period of three (3) years upon the expiration of his tenure as CEO.

To ensure continuity and a fresh injection of ideas, the Code of Corporate Governance released by the CBN in 2014, provided that Non-Executive Directors of banks shall serve for a maximum of three (3) terms of four (4) years each.
It also reiterated its earlier position on the 10 year tenure for bank CEOs, but provided that the tenure may be broken into periods not exceeding 5 years at a time. It further stated that such a CEO shall not be eligible for appointment as CEO of any of its subsidiaries.

2. What is the new position of the CBN?

The position of the CBN today is as follows:
a) the tenure of Executive Directors (“ED”), Deputy Managing Directors (“DMD”) and Managing Directors (“MD”) shall be subject to a maximum of 10 years while Non-Executive Directors (NED) with the exception of Independent Non-Executive-Directors are expected to serve a maximum tenure of 12 years;

b) where a DMD later becomes MD/CEO of the bank before the end of the maximum tenure, he/she shall serve a cumulative tenure not exceeding 12 years for both;

c) where an ED becomes the DMD, the tenure as both shall not exceed 10 years cumulatively;

d) EDs, DMDs and MDs who exit the Board of a bank upon or prior to their maximum tenure shall not be eligible for an appointment as a NED to the Board of Directors for a period of 1 year upon their exit;

e) NEDs who exit a bank upon or prior to the expiration of the maximum tenure of 12 years shall serve a cooling-off period of 1 year before becoming eligible for appointment as  Directors of any other DMB; and

f) the cumulative permitted tenure of any individual as EDs/DMDs, MDs and NEDs across the banking industry is 20 years;

3.What is the relevance of the Circular?

This circular brings a change to the Nigerian banking industry. It provides a maximum tenure for not only the CEO but also for those who hold executive positions in DMBs.

Worthy of note, is that there is now a one (1) year cooling-off period that EDs, DMDs and MDs are to observe prior to serving as a NED to the Board of Directors. NEDs, are also required to observe a 1 year cooling-off period before appointment to the Board of Directors at any other DMB.

Perhaps the CBN's intention is to avoid a conflict of interest and enforce confidentiality in the banking industry.


We expect that this will improve the corporate governance practices in the banking sector and promote diversity in leadership.

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