CBN mandates banks to appoint CEOs six months early

CBN mandates banks to appoint CEOs six months before exits to avoid leadership gaps and boost corporate governance across Nigeria’s financial system

CBN Governor, Olayemi Cardoso has mandated banks to appoint their CEOs at least six months before their predecessors leave office, in a bold move to prevent leadership gaps and protect financial system stability.

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The Central Bank of Nigeria (CBN) has directed all Domestic Systemically Important Banks (DSIBs) to seek regulatory approval for new Managing Directors or Chief Executive Officers six months before the current officeholder’s tenure expires.

The announcement forms part of sweeping efforts to improve corporate governance and ensure smooth transitions at the top of Nigeria’s most critical financial institutions.

The directive was outlined in a circular issued by Dr Rita Sike, Director of Financial Policy and Regulation, and recently published on the CBN website.

The policy also requires banks to publicly announce successor CEOs at least three months before the incumbent exits, ensuring transparency and market stability.

According to the CBN, delays or uncertainty in naming new leadership can send ripples through the financial system, potentially destabilising not only banks but also the broader economy.

DSIBs, due to their size, complexity, and links to other institutions, are deemed too important to be left exposed to avoidable governance risks.

The circular reads: “Each DSIB is hereby required to ensure it obtains regulatory approval for the appointment of a successor Managing Director not later than six months before the expiration of the tenor of the incumbent MD/CEO.”

The rule is grounded in 2023 corporate governance guidelines that stress the importance of succession planning.

The mandate to appoint CEOs well ahead of leadership changes in order to reduce uncertainty, reassure investors, and give incoming executives time to prepare.

Experts say the directive aligns with international best practices and will enhance long-term confidence in Nigeria’s banking sector.

It’s seen as part of Governor Olayemi Cardoso’s reform agenda, which prioritises financial transparency, executive accountability, and institutional resilience.

This mandate is not only to prevent disruption, but also to counter the speculation and rumour that often accompany executive exits in Nigeria’s volatile economic environment.

Such speculation, in the past, has caused market jitters and weakened investor confidence.

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By setting a firm timetable for CEO transitions, the apex bank is making a powerfully clear statement: leadership matters, and planning it well in advance is no longer optional.

Peculiar Adirika