The Central Bank of Nigeria (CBN) has mandated Domestic Systemically Important Banks (DSIBs) to get approval for new Managing Directors/Chief Executive Officers (MD/CEOs) and other top executives at least six months before the expiration of the incumbent’s tenure.
According to the apex bank, this directive is part of broader efforts to strengthen corporate governance and minimize disruptions that could destabilize the financial system.
The directive was contained in a circular signed by Dr Rita Sike, Director of Financial Policy and Regulation, published on the CBN’s website recently.
The circular reads in part, “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 before the expiration of the tenor of the incumbent MD/CEO.”
Banks must also “publicly announce the appointment of the successor MD/CEO not later than three months before the planned exit of the incumbent MD/CEO.”
The CBN warned that leadership uncertainty at large banks could destabilise the entire financial sector and damage the wider economy.
The new rule draws from corporate governance guidelines issued in 2023, which require commercial, merchant, non-interest, and payment service banks to maintain strong succession plans for senior executives.
The policy “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,” the central bank said.
DSIBs play an outsized role in Nigeria’s financial system because of their scale, complexity, and connections with other institutions. A shock at one of these banks could ripple across financial markets, affecting depositors, shareholders, and the broader economy.
By tightening succession rules, the CBN aims to ensure smoother leadership transitions and stronger institutional resilience. The policy also aligns Nigeria more closely with international best practice, where regulators emphasise succession planning as a critical element of risk management.
Under the new rules, DSIBs must begin succession planning well in advance, secure CBN approval six months before a handover, and make public announcements three months ahead. The timeline gives stakeholders – including investors, customers, staff, and regulators – greater clarity about leadership continuity.
Analysts say the measure is intended to reassure markets in an economy often hit by shocks such as currency volatility, high inflation, and rising interest rates. It could also reduce speculation and rumours over executive exits, which have previously disrupted confidence and unsettled investors.
The directive fits with the broader reform agenda of CBN Governor Olayemi Cardoso, who has prioritised transparency, governance, and resilience in the financial sector. The apex bank has introduced foreign exchange reforms, tightened recapitalisation requirements, and rolled out other policies to stabilise the industry.